Suppose a nation's 2010 nominal GDP was $972 billion and the general price index was 90. To make the 2010 GDP comparable with the base year GDP, the 2010 GDP must be:
A. deflated to $678 billion.
B. deflated to $896 billion.
C. inflated to $1,080 billion.
D. deflated to $1,080 billion.
C. inflated to $1,080 billion.
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Governments can use subsidies ________
A) as a means of increasing government spending B) when they want to increase taxes C) to achieve an efficient outcome if there are external costs D) to achieve an efficient outcome if there are external benefits
The shortened work week coupled with rising hourly wages in the U.S. economy shows that
a. the income effect has been dominant. b. the substitution effect does not exist at all. c. the U.S. worker is no longer productive. d. workers have become increasingly lazy.
Suppose the cost of medical care rose 200 percent from 1990 to 2010, and average prices for the economy rose 150 percent. Relative to others, people who purchased medical care experienced a:
A. Lower real income as a result of the price effect. B. Higher real income as a result of the price effect. C. Lower real income as a result of the wealth effect. D. Higher real income as a result of the wealth effect.
Which of the following is a normative economic statement?
A. The price of milk is too high. B. The current high price of milk is the result of reduced worldwide supply. C. When the price of milk rises, the quantity of milk purchased falls. D. When the price of milk rises, the cost of milk-based products rises.