A GDP deflator of 112 means:
A. the overall output increased by 12 percent since the base year.
B. the production of each good in the economy has increased by 12 percent.
C. every price in the economy has gone up by 12 percent.
D. the overall price level is 12 percent higher than in the base year.
Answer: D
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Costs should always be evaluated before determining benefits.
A. True B. False C. Uncertain
Autonomous expenditure is the component of
A) induced expenditure that changes when in real GDP changes. B) aggregate planned expenditure that changes only when government expenditure on goods and services change. C) aggregate expenditure that does not change when real GDP changes. D) aggregate expenditure that does not change when the interest rate changes. E) aggregate expenditure that changes when real GDP changes.
A bank seeks a 4% real return on its loans and predicts a 4% annual rate of inflation. It should therefore charge a nominal interest rate of
A) 0%. B) 1%. C) 4%. D) 8%. E) 12%.
A free rider is a person who:
a. is harmed by another's actions. b. is subject to a negative externality. c. receives benefits from someone else's action but does not pay for them. d. pays less than the full value for a product. e. won the state lottery.