When the price level increases, the effect of a change in government spending on real GDP will be understated
a. True
b. False
Indicate whether the statement is true or false
True
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The diagram below shows Spencer's annual demand for videos. Spencer currently rents videos from Blockpopper's, which charges $2.50 per rental.
(i) How many videos does Spencer rent each year? How much consumer's surplus does Spencer receive from renting videos?
(ii) Blockpopper's starts a "frequent viewers" club. For a membership fee of $35 per year, club members can rent as many videos as they wish at the discounted price of $2 per rental. Should Spencer join the "frequent viewers" club? If yes, how much surplus value would Spencer receive as a club member? If no, what membership fee would Spencer be willing to pay to join the club?
Suppose an economy had an inflation rate of 7 percent last year. This has decreased to 6 percent this year. This means that the economy is: a. suffering from hyperinflation. b. experiencing deflation. c. experiencing disinflation
d. experiencing a wage-price spiral. e. experiencing a decrease in real wage.
As real interest rates fall, firms desire to
a. buy more new equipment and buildings. This response helps explain why the supply of loanable funds is upward sloping. b. buy more new equipment and buildings. This response helps explain why the demand for loanable funds is downward sloping. c. buy less new equipment and buildings. This response helps explain why the supply of loanable funds is upward sloping. d. buy less new equipment and buildings. This response helps explain why the demand for loanable funds is downward sloping.
If the price of flashlights in production increases, then supply of ______ would most likely increase.
a. batteries b. pencils c. olive oil d. iron ore