List the components of aggregate expenditure and describe how each of them changes as real GDP increases
What will be an ideal response?
The components of aggregate expenditure are consumption expenditure, investment, government expenditures on goods and services, exports, and imports. As real GDP increases, consumption expenditure and imports increase. However, investment, government expenditure on goods and services, and exports do not change—they are examples of autonomous expenditure, spending that does not change when real GDP changes.
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The assumption that a perfectly competitive industry has many sellers, each selling an identical product, leads to the conclusion that
A) consumers get to see a variety of outputs. B) there are many buyers. C) the economic profit will be positive in the long run. D) firms are price takers.
Which of the following statements about positive economic analysis is false?
A) There is much more disagreement among economists over normative economic analysis than over positive economic analysis. B) Positive analysis uses an economic model to estimate the costs and benefits of different course of actions. C) Unlike normative economic analysis, positive economic analysis can be tested. D) There is much more disagreement among economists over positive economic analysis than over normative economic analysis.
Each nation's International Monetary Fund (IMF) quota subscription is based on
A) its national income. B) its share in world trade. C) its public debt. D) its trade surplus.
The production possibilities curve shifts outward when
A) the law of increasing additional cost takes hold. B) the economy is producing efficiently. C) we produce more consumption goods over productive investment in equipment. D) there is an increase in resources or technology.