What is consumer surplus? Why would policy makers be interested in consumer surplus?
What will be an ideal response?
Consumer surplus is the difference between what a consumer is willing to pay for a product and what she actually pays for the product. Since consumer surplus measures the benefit that consumers receive from a good as they themselves perceive it, it serves as a good measure of economic well-being. Thus, if policy makers care about consumer preferences, they could use this measure to make normative judgments about market outcomes.
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Which of the following variables is used to measure economic growth?
A) nominal GDP B) nominal GDP per capita C) real GDP D) real GDP per capita
The Fed seeks a target rate of inflation of around _____
a. 1 percent b. 2 percent c. 3 percent d. 4 percent e. 5 percent
Assume that the central bank increases the reserve requirement. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and reserve-related (central bank) transactions become more negative (or less positive). b. The GDP Price Index falls, and reserve-related (central bank)transactions remain the same. c. The GDP Price Index and reserve-related (central bank) transactions remain the same. d. The GDP Price Index rises, and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
For any pair of nations and goods, if each country has an absolute advantage in the production of one product, it is reasonable to expect that specialization and trade will benefit both countries.
Answer the following statement true (T) or false (F)