Suppose a friend claims he is helping the economy by throwing trash on the street rather than in trash cans because the extra expenditures necessary to clean up the streets will increase GDP. Your friend is
A. Wrong. GDP will not be affected because this is not a socially desirable use of resources and will therefore not be included in GDP.
B. Right. GDP will increase, ceteris paribus.
C. Wrong. GDP will not be affected because nothing new is being produced.
D. Wrong. GDP will decline because the neighborhood will be less clean.
Answer: B
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In a collusive agreement between two duopolists in an oligopoly, each firm has an incentive to cheat on the agreement because the firm's price
A) exceeds its marginal cost. B) exceeds its marginal revenue. C) is less than its average total cost. D) None of the above answers is correct.
Under comprehensive health insurance the level of output is determined where _____
a. supply equals demand b. demand equals zero c. supply is of unitary elasticity d. the insurer sets it
Which of the following is considered a financial intermediary?
a. The Federal Reserve b. A bankruptcy court c. The U.S. Department of Commerce d. A credit union e. A foreign exchange
GDP is the total market value of:
a. All expenditures on natural resources, labor, and capital goods in an economy in a given year b. All intermediate goods and services produced in an economy in a given year c. All final goods and services produced in an economy in a given year d. All expenditures on consumption, investment, and net exports in an economy in a given year