Imagine an economy where the only good produced is corn. Output in 1990 was 100 bushels and the price of corn was $2 per bushel. Suppose in 2000 . output is 100 bushels and the price of corn is $4 per bushel. Which one of the following is true?
a. GDP remains unchanged between 1990 and 2000.
b. Real GDP doubled between 1990 and 2000.
c. Output doubled between 1990 and 2000 . but GDP remains unchanged.
d. Nominal GDP fell in 2000 (compared to 1990) because of higher corn prices.
e. Nominal GDP increases from $200 in 1990 to $400 in 2000.
E
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If the law of one price holds for a single good, then absolute PPP measured with price indexes will also hold
Indicate whether the statement is true or false
Individuals derive utility from picnics, p, and kayak trips, k. Assuming that an individual's utility is U(p,k) = k0.5p0.5 and income is $100, what is the marginal rate of substitution (MRS) between picnics and kayak trips?
A) MRS = 1. B) MRS = -1. C) MRS = - D) There is no substitution because picnics and kayak trips are perfect complements.
The largest overall recipients of remittances are:
A. China and India, which each get more than $5 billion per year. B. China and India, which each get more than $50 billion per year. C. Chile and Mexico, which each get more than $50 billion per year. D. Chile and Mexico, which each get more than $5 billion per year.
An example of a government policy to enhance technological progress is:
A. maintaining a well-functioning legal system. B. the provision of publicly-funded education. C. the construction of an interstate highway system. D. government support for basic research.