The amount of goods and services the economy could produce if the labor force is fully employed is called
a. nominal GDP.
b. real GDP.
c. actual GDP.
d. potential GDP.
d
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An approach that can be taken by someone directly involved in a transaction to solve the problems caused by information asymmetry is:
A. proofing. B. building a reputation. C. disclosure laws. D. mandating that information be shared
Following mergers that raised the market shares of two airlines to 79 and 82 percent, respectively, of traffic in their hub cities, prices of service rose and the quantities of service fell, even though in most other markets, prices fell and quantities increased. The result suggests that
A. these markets were contestable. B. there was evidence of market power. C. oligopoly firms bought out their competitors. D. the market had no barriers to entry.
If country A can produce more of practically everything than can country B, then which of the following statements is true?
A. Country B has no incentive to trade with country A. B. Trade can benefit both countries. C. Country B cannot have a comparative advantage in the production of any good that country A wants to buy. D. Country A has no incentive to trade with country B.
Provisions in the law that automatically increase government spending or decrease taxes when real output declines are called:
A. the marginal propensity to consume. B. automatic stabilizers. C. autonomous stabilizers. D. the income-expenditure multiplier.