The table above gives data for the nation of Pearl, a small island in the South Pacific. The economy is at full employment when real GDP is
A) $31 billion. B) $34 billion. C) $28 billion. D) $22 billion. E) $25 billion.
E
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
The most anyone is willing to pay for another purse is $30. Currently the price of a purse is $40, and the cost of producing another purse is $50. The marginal benefit of a purse is
A) $50. B) $40. C) $30. D) an amount not given in the answers above.
Which of the following items are NOT counted in U.S. GDP?
A) your purchase of a new Ford Mustang B) your purchase of new tires for your old car C) GM's purchase of tires for new cars D) a foreign consumer's purchase of a new Ford Mustang
Which of the following correctly explains the crowding-out effect?
a) An increase in government expenditures decreases the interest rate and so increases investment spending. b) An increase in government expenditures increases the interest rate and so reduces investment spending. c) A decrease in government expenditures increases the interest rate and so increases investment spending. d) A decrease in government expenditures decrease the interest rate and so reduces investment spending.