In terms of GDP, which of the following is an example of a final good?
a. rubber used to make automobile tires
b. a tomato ready to be sold at a farmer’ s market
c. tungsten mined to Utah
d. oil drilled in the Gulf of Mexico
b. a tomato ready to be sold at a farmer’ s market
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According to the Taylor rule, the Fed will set the federal funds rate target based on which of the following?
A) an estimated long-run real interest rate B) the current deviation of the actual inflation rate from the Fed's inflation objective C) the proportionate gap between actual real GDP and a measure of potential real GDP D) all of the above
The market for a perfectly competitive industry has an equilibrium price of $5 and the minimum average cost for the firms in this market is $3. In the long run, we would expect
A. each firm to produce less output than their current output. B. the number of firms to fall. C. each firm’s profits to remain at $2 per unit. D. each firm’s average cost to rise.
Following an unexpected decline in aggregate demand, once production cutbacks start offsetting rising inventory levels:
a. the aggregate demand curve will shift to the right. b. the aggregate supply curve will shift to the left. c. the economy will return to its natural rate of unemployment. d. the short-run Phillips curve will shift to the right. e. the economy will face both higher inflation and a higher unemployment rate.
Studies have shown that in the 1980s the wage gap between college-educated workers and those with high school education or less
a. decreased dramatically. b. decreased slightly. c. remained unchanged. d. widened dramatically.