In Macroland, a country whose economy operates according to Okun's law, potential GDP equals $10 trillion, the actual rate of unemployment is 8 percent, and the natural unemployment rate is 6 percent. What is real actual GDP in Macroland?
A. $9.6 trillion
B. $10 trillion
C. $9.8 trillion
D. $10.2 trillion
Answer: A
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Ashwini is thinking of buying travel insurance (which pays her if she needs to cancel her trip) for her trip to Cancun over spring break. There is a 5 percent chance that she will need to cancel her trip
Without insurance she would lose the full $2,000 price of the trip; with insurance she would get a full refund of $2,000. The premium for this insurance is $105. Which of the following is CORRECT? I. The expected value of Ashwini's loss is $100. II. If Ashwini is risk averse she is willing to buy the insurance only if its price is less than $100. A) I only B) II only C) I and II D) neither I nor II
Refer to Table 2-11. If the two countries specialize and trade, who should export wheat?
A) South Korea B) There is no basis for trade between the two countries. C) China D) They should both be exporting wheat.
Considering the balance sheet for all commercial banks in the U.S., the largest category of assets is:
A. required reserves. B. cash items. C. U.S. Government Securities. D. loans.
Data from the Bureau of Labor Statistics show that the largest category of consumer spending is housing
a. True b. False Indicate whether the statement is true or false