When calculating GDP, ________ are added and ________ are subtracted.
A. exports; imports
B. exports; net exports
C. imports; net exports
D. imports; exports
Answer: A
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During recessions, the value of collateral decreases and corporate profits decrease, so firms do not have cash to finance new investment projects. Therefore, credit rationing depends on the state of the economy. This situation is known as the
A) risk acceptance cost. B) lender's dilemma. C) default premium. D) financial accelerator.
Unemployment
a. usually decreases whenever nominal GDP decreases. b. usually increases whenever real GDP decreases. c. usually decreases whenever nominal GDP increases. d. usually increases whenever the price level increases.
The tendency for people to behave in a riskier way or to renege on contracts when they do not face the full consequences of their actions is called:
A. collective bargaining. B. adverse selection. C. moral hazard. D. counter information.
Refer to the diagram. A shortage of 160 units would be encountered if price was:
A. $1.10, that is, $1.60 minus $.50.
B. $1.60.
C. $1.00.
D. $0.50.