A country has a trade deficit when
A. government spending is greater than tax receipts.
B. its exports are less than its imports.
C. its exports equal its imports.
D. its exports exceed its imports.
Answer: B
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Refer to Figure 4-6. What area represents consumer surplus at the equilibrium price of P1?
A) D + E B) A C) A + B + C + D + E D) A + B + C
The spending multiplier is defined as:
A. the ratio of the change in equilibrium real GDP to the initial change in spending. B. the change in initial spending divided by the change in personal income. C. 1 / (marginal propensity to consume). D. 1 / (1 ? marginal propensity to save).
Suppose that, as a firm's total production (or output) increases, the firm's manager correctly observes that an economy of scale is occurring. The manager must have noticed that:
a. ?per-unit costs increase as output increases b. ?per-unit costs decrease as output increases c. ?per-unit costs remain constant as output increases d. ?output does not affect per-unit costs
In the long run, a 1% increase in real GDP tends to
A) cause a 1% increase in the demand for money. B) cause a less than 1% increase in the demand for money. C) cause a greater than 1% increase in the demand for money. D) have virtually no effect on the demand for money, because the interest rate is the main determinant of the demand for money.