If Year 1 is the base year, the GDP price deflator for Year 2 is approximately
A) 100.0.
B) 126.3.
C) 131.3.
D) 181.0.
B
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Canada produces MP3 players and lumber, and the horizontal axis for Canada's production possibilities frontier represents the amount of lumber produced
Canada's borders are not initially open to trade, and the country consumes along its production possibilities frontier where the MRT and MRS equal the price ratio for the two products ($200 per 1,000 board-feet of lumber versus $100 per MP3 player). If Canada opens its borders to trade with China at world prices for the two goods ($300 per 1,000 board-feet of lumber and $100 per MP3 player), what happens in the Canadian economy? A) Canada will shift consumption along the original production possibilities frontier until MRT equals the world price ratio, and Canadians will consume less lumber and more MP3 players. B) Canada will shift consumption along the original production possibilities frontier until MRT equals the world price ratio, and Canadians will consume more lumber and less MP3 players. C) Canada will be able to trade with China, and the gains from trade allow Canada to afford bundles of the two goods that do not lie along the country's production possibilities frontier. D) Canada may trade with China, but we do not have enough information to determine how the opening of the border will affect the trade decisions.
Refer to the above table. Which of the following statements is correct?
A) The table follows economic principles because in an increasing cost industry, increases in a variable input will lead to increase in output. B) The table does not follow economic principles because in an increasing cost industry, increases in a variable input will lead to decrease in output. C) The table follows economic principles because the law of diminishing marginal product predicts that increase in a variable input will eventually lead to a decrease in the marginal physical product. D) The table does not follow economic principles because the law of diminishing marginal product predicts that increase in a variable input will eventually lead to an increase in the marginal physical product.
When a good ends up undersupplied, we can assume it is a:
A. common resource. B. private good. C. public good. D. transitory good.
If policymakers are not aggressive about keeping inflation close to the target rate, the slope of the monetary policy reaction curve would be:
A. horizontal. B. steep. C. negative. D. relatively flat.