To what does the "GDP gap" refer?
a. The difference between real and nominal GDP.
b. The difference between this year's real GDP and last year's GDP.
c. The difference between "full-employment" real GDP and actual real GDP.
d. The difference between real GDP in the prior trough and real GDP in a current trough of the business cycle.
c
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"Even under flexible exchange rate regime, governments could not be indifferent to the behavior of exchange rates and inevitably surrendered some of their policy autonomy in other areas to prevent exchange rate movements they viewed as harmful to
their economies." Discuss.
What happens to total revenue if price increases and demand is inelastic? Why?
What will be an ideal response?
Suppose that a perfectly competitive industry becomes a monopoly. What effect will this have on consumer surplus, producer surplus, and deadweight loss?
What will be an ideal response?
If the percentage change in the price of a good is equal to the percentage change in the quantity demanded of that good, then the demand for that good is:
A. inelastic. B. unit elastic. C. elastic. D. perfectly elastic.