When a firm produces and sells a refrigerator worth $1,000, its contribution to the gross domestic product (GDP) on the income side is measured by:
a. the price paid by the consumer
b. the investment made by the firm to manufacture the refrigerator.
c. the stock of inventories used by the firm to manufacture the refrigerator.
d. the cost of raw materials used by the firm to manufacture the refrigerator.
e. the sum of the wages, interest, and rent paid by the firm's owners and the profit of the firm.
e
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Transfer programs are a way to redistribute incomes to address economic inequities
Indicate whether the statement is true or false
Suppose the economy is in long-run equilibrium. In a short span of time, there is a large influx of skilled immigrants, a major new discovery of oil, and a major new technological advance in electricity production. In the short run, we would expect
a. the price level to rise and real GDP to fall. b. the price level to fall and real GDP to rise. c. the price level and real GDP both to stay the same. d. All of the above are possible.
If a farmer earns a larger profit than the "normal profit" by producing a special type of vegetable that becomes popular,
A. the farm's owners are likely to withdraw from the industry in order to retire early. B. the firm will continue to earn its "normal profits" far into the future. C. other farmers are likely to plant the same vegetable, pushing up the prevailing market price. D. other farmers are likely to plant the same vegetable, pushing down the prevailing market price.
According to the long-run Phillips curve, which of the following is true?
(a) Unemployment increases with an increase in inflation (b) Unemployment decreases with an increase in inflation (c) Increased automation will lead to lower levels of structural unemployment in the long run (d) Changes in the composition of the overall demand for labor tend to be deflationary in the long run (e) The natural rate of unemployment is independent of monetary and fiscal policy changes that affect aggregate demand