Figure 11-1
?
In Figure 11-1, to reach the level of potential GDP, the administration of President Obama would most likely advocate
A. increasing Social Security payments.
B. decreasing defense spending.
C. decreasing personal income taxes.
D. All of the above are correct.
Answer: A
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In 2015, Janice Quinn sells a five-year-old car to Used Car, Inc. for $6,000. In the same year, Used Car, Inc. resells the car to Hilda Goner for $6,500. What is the contribution of these transactions to GDP in the year 2015?
A. $6,000 B. $12,500 C. $500 D. $0
If reservation prices are positively correlated, then
A) pure bundling cannot increase a firm's profit. B) pure bundling can increase a firm's profit. C) it is unclear whether or not pure bundling can increase a firm's profit. D) consumers lose leverage over firms.
Smith argues that American producers cannot compete with foreign producers because wages are lower in foreign countries than in the United States. Smith is
A) advancing the foreign export subsidies argument for protectionism. B) making the mistake of believing that high wages mean high costs. C) advancing the antidumping argument for protectionism. D) making the mistake of believing that productivity is higher in foreign countries than in the United States. E) none of the above
The law of comparative advantage explains why
A) countries but not individuals can benefit from specializing in the activities they do best. B) individuals as well as countries can benefit from specializing in the activities they do best. C) neither individuals nor countries can benefit from specializing in the activities they do best. D) individuals but not countries can benefit from specializing in the activities they do best.