Which of the following would result from a price support program when the support price is set above the equilibrium price, ceteris paribus?
A. The consumption of the product would rise.
B. Quality would deteriorate.
C. The price paid by consumers would rise.
D. Output would decline.
Answer: C
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Assuming the price level has not changed, how would an increase in the aggregate demand affect real GDP?
A) It only changes with changes in exports. B) It increases. C) It only changes with changes in imports. D) It decreases.
Happy Cows is a dairy farm that is currently earning $100,000 in economic profit. The managers of Happy Cows are considering adding a second dairy farm, which will generate an additional $40,000 in economic profit. It is economically sound for the managers of Happy Cows to add the second farm if, after accounting for the managerial diseconomies, the first farm's economic profits exceed ________.
A) $30,000 B) $60,000 C) $40,000 D) $10,000
Problems with the federal government budget process include: a. tough choices to be made by Congress each year on which entitlement programs will receive full support. b. the constitutional requirement of Congress to balance the budget on an annual basis
c. an overly detailed budget that allows Congress to reward friends, thereby discouraging restraint on spending. d. a short review period for Congress that results in poor choices in funding programs. e. Congress having too much control over the budgetary process.
The default-risk premium:
A. must always be greater than 0 (zero). B. is also known as the risk spread. C. is assigned by a bond-rating agency. D. is negative for a U.S. Treasury bond.