After the terrorist attacks on September 11, 2001, governments within the United States raised expenditures to increase security at airports. These purchases of goods and services are
a. not included in GDP since they do not represent production.
b. not included in GDP since the government collects taxes to pay for them.
c. included in GDP since government expenditures on goods and services are included in GDP.
d. included in GDP only to the extent that the federal government, rather than state or local governments, paid for them.
c
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Jenny sells lemonade in front of her house in the summer. Several other kids in Jenny's neighborhood also run lemonade stands in the summer. Suppose that the first week of summer, Jenny charged 25 cents for an 8-ounce cup of lemonade, her next-door neighbor Sam charged 50 cents for an 8-ounce cup of lemonade, and Alex across the street charged 15 cents for an 8-ounce cup of lemonade. Assuming the market for lemonade is perfectly competitive, what is most likely to happen?
A. Everyone will start to charge 50 cents to maximize revenue. B. Eventually prices will equalize across all three lemonade stands. C. A price war will break out, and all of the kids will lower their prices. D. Each kid will keep his or her price at the original amount.
A severe hurricane hits Florida, destroying large amounts of the citrus crop. What is the most likely effect of this on the aggregate supply?
A. It will remain unchanged. B. No effect; the economy will move along the curve to a higher price level. C. No effect; the economy will move along the curve to a lower price level. D. It will increase. E. It will decrease.
When a grocery store offers discount coupons in Sunday papers, it is trying to
a. Price discriminate b. Undercut its competition c. Reward the frequent readers d. Provide a social service
Deadweight loss measures the loss in society's welfare that occurs because a monopolist does not produce the socially efficient level of output
a. True b. False Indicate whether the statement is true or false