If there is a permanent decrease in demand in a perfectly competitive market, then there is an initial ________ in price and existing firms ________
A) rise; make an economic profit
B) rise; incur an economic loss
C) fall; make an economic profit
D) fall; incur an economic loss
D
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In any year, real GDP
A) must always be less than potential GDP. B) might be greater or less than potential GDP. C) will always be greater than potential GDP because of the tendency of nations to incur inflation. D) always equals potential GDP.
Which best describes a credit default swap?
A) It is designed to reduce interest-rate risk. B) The issuer receives payments from the buyer in return for agreeing to make payments to the buyer if the security goes into default. C) Issuers are taking out insurance in case of default. D) It represents a way for the issuer to establish its creditworthiness.
The best example of a perfectly competitive market would be the market for:
A. computers. B. shoes. C. grain. D. cameras.
One principle of economic growth is the notion that, to raise living standards over time, an economy must:
A.
Have full employment of its labor force
B.
Devote some portion of its current output to increasing its future output
C.
Maintain low inflation over the years
D.
Have a small population so that its GDP per person will be high