If real GDP is greater than potential GDP, then:
A. the output gap is negative.
B. the actual unemployment rate is lower than the natural rate of unemployment.
C. the actual unemployment rate equals zero.
D. the actual unemployment rate is greater than the natural rate of unemployment.
Answer: B
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What criticism does the textbook level against the cost-plus-markup theory of price setting?
A) The theory does not agree with what businessmen say about price setting. B) The theory does not account for vastly different percentage markups on different products. C) The theory implies firms will sometimes want to set prices below average cost per unit. D) The theory ignores sunk costs. E) All of the above.
Based on the table, what is Barry's marginal benefit from the 40th slice of pizza?
A) $3 B) $5.50 C) $0.50 D) $12
If a borrower and a lender agree on a long-term loan at a nominal interest rate that is fixed over the duration of the loan, how will a higher-than-expected rate of inflation impact the parties if at all?
What will be an ideal response?
Suppose that in a month the price of a dozen of eggs increases from $1.50 to $2. At the same time, the quantity of dozens of eggs demanded decreases from 200 to 150. The price elasticity of demand for dozens of eggs is:
A. perfectly inelastic. B. inelastic. C. unit elastic. D. elastic.