Jim's Nursery produces and sells $1100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's contribution to GDP is
A) $900.
B) $1000.
C) $1100.
D) $1800.
C
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Assume X and Y are the only two goods a person consumes. If after a rise in the quantity demanded of Y increases, one could say
a. the income effect dominates the substitution effect for Y. b. the substitution effect dominates the income effect for Y. c. it is impossible to determine whether the substitution or income effect dominates for Y. d. None of the above.
If the rate of interest did not equate saving and investment and total output was greater than total spending, the classical economist argued, competition would tend to force
A. product and resource prices down. B. product prices up and resource prices down. C. product prices up and resource prices up. D. product prices down and resource prices up.
Suppose the price of steel decreases. In the market for automobiles, we would expect which of the following to occur?
A. both the market clearing price and the equilibrium quantity will rise. B. the market clearing price will fall and the equilibrium quantity will rise. C. both the market clearing price and the equilibrium quantity will fall. D. the market clearing price will rise and the equilibrium quantity will fall.
Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unanticipated inflation occurs in the economy, then:
A. Both lenders and borrowers benefit B. Both lenders and borrowers are hurt C. Borrowers are hurt, but lenders benefit D. Lenders are hurt, but borrowers benefit