The table above has real and nominal GDP for two years for a foreign country
a. What does the GDP price index equal in 2010? What does the value of the GDP price index tell you about 2010?
b. What does the GDP price index equal in 2011?
a. The GDP price index equals (100 ) × (nominal GDP ÷ real GDP). In 2010, the GDP price index equals (100 ) × ($3,300 trillion ÷ $3,300 trillion) = 100. Because the GDP price index equals 100, we can determine that 2010 is a base year.
b. In 2011, the GDP price index equals (100 ) × ($4,200 ÷ $3,600 ) = 116.67.
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Suppose that your public library charges a fixed monthly membership fee of $12. Members are allowed to check out as many books as they want under this plan. The average member checks out 4 books per month
Suppose that your public library changes its policy. Now each book costs $3 to check out but there is no longer a monthly membership fee. What effect do you think the new policy will have on the total number of books checked out from your library each month? The new policy is likely to ______the number of books checked out because ________. A) leave unchanged; members have already shown that they are willing to pay $12 to check out 4 books per month B) leave unchanged; the average cost of the library service is the same under both plans C) reduce; the marginal benefit of checking out books is now lower under the new policy D) reduce; the marginal cost of checking out books is now higher under the new policy E) increase; the average benefit of checking out more than 4 books is now higher under the new policy
Automatic stabilizers "lean against the prevailing wind" of the business cycle because:
A. wages are controlled by the minimum wage law. B. federal expenditures and tax revenues change as the level of real GDP changes. C. the spending and tax multipliers are constant. D. they include the power of special interests.