Which adjustment(s) must be made to convert net domestic product to GDP? i) add indirect taxes ii) subtract subsidies iii) add depreciation

A.

i and iii only.

B.

iii only.

C.

ii only.

D.

i, ii and iii.

E.

i and ii.

A cut in the income tax rate ________ the tax wedge and ________ employment, saving, and investment.

A.

increases; decreases

B.

decreases; does not change

C.

increases; increases

D.

does not change; increases

E.

decreases; increases

When the multiplier is ________ , an autonomous decrease in investment of $200 billion decreases equilibrium real GDP by $400 billion. When the multiplier is ________ , an autonomous decrease in investment of $200 billion decreases equilibrium real GDP by $800 billion.

A.

$400 billion; $800 billion

B.

4.0; 8.0

C.

0.2; 0.4

D.

0.4; 0.2

E.

2.0; 4.0

The Federal Reserve fears that the United States economy is growing too slowly and is stuck in a recession. To move the economy back to its potential GDP, the most likely policy action for the Fed is to ________ the federal funds and thus ________.

A.

raise; increase aggregate demand

B.

lower; increase aggregate demand

C.

lower; decrease aggregate supply

D.

lower; increase aggregate supply

E.

raise; decrease aggregate demand

If the demand for used cars decreases after the price of a new car falls, used cars and new cars are

A.

normal goods.

B.

inferior goods.

C.

substitute goods.

D.

complementary goods.

E.

The questions errs because it is the quantity of used cars, NOT the demand for used cars, that will change when the price of a new car falls.

In the short run, when the price level rises and increases the demand for money, the nominal interest rate ________ and the real interest rate ________.

A.

falls; falls

B.

falls; rises

C.

rises; rises

D.

rises; falls

E.

does not change; does not change

During early 2001, the Fed unexpectedly increased the money supply. The effect of this policy was a

A.

upward shift of the

shortrun

Phillips curve.

B.

movement upward along the

shortrun

Phillips curve.

C.

downward shift of the

shortrun

Phillips curve.

D.

rightward shift of the

longrun

Phillips curve.

E.

movement downward along the

shortrun

Phillips curve.

Which economic question depends on the incomes that people earn and the prices they pay for goods and services?

A.

How?

B.

What?

C.

Why?

D.

For whom?

E.

Where?

The minimum wage is a

A.

factor that decreases unemployment because fewer people search for work if the minimum wage is increased.

B.

government established highest wage that is legal to pay.

C.

possible cause of job rationing because it raises wages above their equilibrium.

D.

possible cause of job search because it lowers wages below their equilibrium.

E.

possible cause of job rationing because it lowers wages below their equilibrium.

need help awnsering thse quesions