An economic model can accurately explain how the economy is organized because it is designed to include, to the extent possible, all features of the real world
a. True
b. False
Indicate whether the statement is true or false
False
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Government spending (G)
What will be an ideal response?
A small country imports T-shirts. With free trade at a world price of $10, domestic production is 10 million T-shirts and domestic consumption is 42 million T-shirts. The country's government now decides to impose a quota to limit T-shirt imports to 20 million per year. With the import quota in place, the domestic price rises to $12 per T-shirt and domestic production rises to 15 million T-shirts per year. The quota on T-shirts causes domestic consumers to
A. gain $7 million. B. lose $70 million. C. lose $7 million. D. lose $77 million.
Constant dollars are
A. the same as current dollars. B. when an individual does not receive a cost of living increase. C. what nominal GDP is measured in. D. dollars corrected for general price level changes.
One possible result of a fall in aggregate demand coupled with a stable short-run aggregate supply is
A. a recession. B. a rise in the stock market. C. an increase in employment levels. D. an economic expansion.