The best definition for economic growth is
A) a sustained expansion of production possibilities measured as the increase in real GDP over a given period.
B) a sustained expansion of production possibilities measured as the increase in nominal GDP over a given period.
C) a sustained expansion of consumption goods over a given period.
D) a sustained expansion of production goods over a given period.
A
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Why are individual buyers and sellers in perfect competition called price takers?
What will be an ideal response?
You make a loan to the government of $100. The government promises to pay you back some sum of money in two years. The interest rate will be 4 percent over that period, but inflation will be 4 percent. How much will you require that the government pay you in two years in the absence of any inflation? With inflation?
What will be an ideal response?
Refer to the above figure. Suppose the economy is at C. If the government tried to reduce the unemployment rate to 3 percent, the new long-run outcome will be at point
A) A. B) C. C) D. D) H.
When the existing firms in a monopolistically competitive industry earn above-normal profit:
a. new firms enter into the market, and entry continues until firms earn normal profit. b. new firms have no incentive to enter the market. c. new firms have an incentive to enter the market but are legally barred from doing so. d. they increase their production and lower the price level. e. their cost structure automatically changes, eliminating the additional profit.