Which of the following statements is TRUE?
A) Real GDP fluctuates around potential GDP.
B) Potential GDP fluctuates around real GDP.
C) Potential GDP is the same as real GDP.
D) When all of the economy's resources are fully employed, the value of production is called real GDP.
A
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The benefit to employers of deferred payments is that
A) adverse selection is eliminated. B) employers cannot engage in any opportunistic behavior. C) these payments raise the cost of being fired, so more monitoring is needed. D) these payments raise the cost of being fired, so less monitoring is needed.
In the short-run macro model, firms that sell more than they produce will respond by
a. reducing output b. increasing output c. reducing prices d. raising prices e. not changing production because the market will adjust on its own