The expenditure approach to deriving gross domestic product sums the following categories of spending
A. consumption, government spending, transfer payments, and net exports.
B. consumption, investment, government spending, and net exports.
C. consumption, savings, investment, and government spending.
D. consumption, income, government spending, and net exports.
Answer: B
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Since firms within a monopolistically competitive industry set output where marginal revenue is equal to marginal cost, the size of the fixed entry cost does not impact the equilibrium price.
Answer the following statement true (T) or false (F)
If the Phillips curve represents a "structural relationship," then
A) the Phillips curve will be vertical in the long run. B) the trade-off between unemployment and inflation is permanent. C) the trade-off between unemployment and inflation holds only for the short run. D) the trade-off between unemployment and inflation holds in the long run, but not in the short run.
According to Coase, firms emerge when
a. transaction costs in the market are less than the cost of hierarchical control b. transaction costs in the market are more than the cost of hierarchical control c. prices in the market are less than the cost of hierarchical control d. prices in the market are more than the cost of hierarchical control e. implicit contracts in the market can be made explicit in a firm
Keynes thought that the behavior of the economy in the short run was influenced by what he called "animal spirits." By this he meant that business people sometimes felt good about the economy, and carried out lots of investment, and at other times felt
bad about the economy, and so cut back on their investment spending. Explain how such fluctuations in investment would lead to fluctuations in real GDP and prices.