Suppose a small economy produces only HD TV sets. In year 1, 100,000 sets are produce and sold at a price of $1,200 each. In year 2, 100,000 sets are produced and sold at a price of $1,000 each. As a result:
A.
Nominal GDP stays constant, while real GDP decreases
B.
Nominal GDP decreases, while real GDP stays constant
C.
Nominal GDP and real GDP both decrease
D.
Nominal GDP decreases, and real GDP decreases even more
B.
Nominal GDP decreases, while real GDP stays constant
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The costs affecting decisions to supply are always
A) accounting costs. B) marginal costs. C) past costs. D) per unit costs. E) non-taxable costs.
In general, an increase in price could be caused by either:
a. an increase in demand or a decrease in supply. b. an increase in demand or an increase in supply. c. a decrease in demand or an increase in supply. d. an increase in demand or an increase in supply.
Consumer surplus is created when
a. a person trades away a good that yields diminishing marginal utility b. a person's total utility increases when consuming an additional unit of a good c. a good is purchased at a price that is less than the price the consumer would have been willing to pay d. the total utility of a good is greater than its marginal utility e. many consumers want to buy a good and the price goes up
. We saw in Chapter 18 that many central banks have turned to a policy framework of inflation targeting. Discuss if this would be effective in a country experiencing deflation.
What will be an ideal response?