GDP is:
a. the total value of all consumer expenditures within a given period.
b. national income after taxes.
c. the total value of all final goods and services plus intermediate goods and services produced domestically within a given period.
d. the value of all final goods and services produced domestically within a given period.
Question 2The main reason why the short-run aggregate supply curve slopes upward is that as the average price level increases, larger scales of production become more profitable.
a. True
b. False
Indicate whether the statement is true or false
Question 3Employment fell last month to its lowest level in the last six years is an example of:
a. the fallacy of composition.
b. positive economics.
c. normative economics.
d. none of the above
Question 4GDP is:
a. the value of all final goods and services produced domestically within a given period of time.
b. the value of all final good and services produced anywhere in the world by a nation's firms within a given period of time.
c. the value of all final goods and services produced by a government within a given period of time.
d. the sum of all currency and coins in circulation.
Question 5The aggregate supply curve shows the negative relationship between general price level and real GDP.
a. True
b. False
Indicate whether the statement is true or false
Question 6Bill says: The imposition of a tax on tequila will increase its price. Bob says: Taxes should be imposed on tequila because college students drink too much.
a. Both statements are normative.
b. Both statements are positive.
c. Bill's statement is normative, and Bob's statement is positive.
d. Bill's statement is positive, and Bob's statement is normative.
Question 7We can calculate the GDP by adding the values added by each firm that produced the goods and services.
a. True
b. False
Indicate whether the statement is true or false
Question 8A higher domestic price level lowers aggregate expenditures and, therefore, shifts the aggregate demand curve to the left.
a. True
b. False
Indicate whether the statement is true or false
Question 9Which of the following is a statement of positive economics?
a. Unemployment is a more severe problem in societies than inflation.
b. Our current unemployment rate is a serious problem.
c. If the overall unemployment rate is 6 percent, teenage unemployment rates will exceed 12 percent.
d. An unemployment rate of 4 percent would be too low.
Question 10Inflation that causes an increase in the prices of goods and services will, other things being equal, tend to decrease nominal GDP.
a. True
b. False
Indicate whether the statement is true or false
Question 11If the average price level falls, the real value of wealth also falls.
a. True
b. False
Indicate whether the statement is true or false
Question 12Which of the following is a statement of positive economics?
a. The income tax reduces after-tax incomes of the rich.
b. A reduction in tax rates makes the after-tax distribution of income fairer.
c. Tax rates ought to be reduced so that people will work more.
d. All of the above are statements of positive economics.
Question 13Real GDP per capita increases if the population grows at a rate faster than real GDP.
a. True
b. False
Indicate whether the statement is true or false
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