Suppose Ford Motor Company produced and sold $50 million 2015 model-year pickup trucks during the last half of 2014. How would this affect GPD?
A) 2014 GDP would remain unchanged, and 2015 GDP would rise by $50 million.
B) 2014 GDP would rise by $50 million, and 2015 GDP would not be affected.
C) Both 2014 and 2015 GDP would rise by $25 million.
D) Trick question: 2015 model-year vehicles can't be produced and sold in 2014.
B
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The long-run aggregate supply curve can be thought of as the
A) level of output that the nation is currently producing. B) full-employment level of real GDP. C) level of real GDP associated with a constant price level. D) level of output for which real GDP equals nominal GDP.
The old saying, “There are no free lunches,” can best be used to explain that ______.
a. free-riders will use goods without paying for them b. there are trade-offs for every government program c. transaction costs prevent the completion of most deals d. private firms are more efficient than the government