What is the relationship between actual and potential real GDP?
What will be an ideal response?
Real GDP equals potential GDP when all resources are fully employed and there are no shortages that lead to inflation. Real GDP can be greater than potential GDP and can be less than potential GDP. During a business cycle, real GDP cycles around potential GDP. During an expansion, real GDP rises above potential GDP and during a recession real GDP falls below potential GDP.
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How would a decrease in lumber prices influence the home construction market?
a. The demand for newly constructed homes will increase. b. The demand for newly constructed homes will decrease. c. The supply of newly constructed homes will increase. d. The supply of newly constructed homes will decrease.
Which of the following events must result in a lower price in the market for Snickers?
a. Demand for Snickers increases, and supply of Snickers decreases. b. Demand for Snickers and supply of Snickers both decrease. c. Demand for Snickers decreases, and supply of Snickers increases. d. Demand for Snickers and supply of Snickers both increase
If Allan lives in Boston and decides to buy a pair of hockey skates from Canada for $100, and the Canadian he bought them from buys a baseball hat and jersey for $100 from Boston, then the U.S. next exports:
A. and net capital outflow both equal ?$100. B. and net capital outflow are both zero. C. is zero and net capital outflow is ?$100. D. equals ?$100 and net capital outflow is zero.
A decrease in the marginal cost arising from a less complex specialized investment environment will cause the optimal contract length to:
A. remain constant. B. increase. C. decrease. D. either increase or decrease.