Answer the following statements true (T) or false (F)
1. Business cycles refer to short term fluctuations in prices.
2. Real GDP can change due to changes in the price level.
3. If nominal GDP is rising faster than real GDP, then inflation must be occurring.
4. Real GDP is calculated using current prices of outputs.
5. Inflation refers to an increase in the overall level of prices.
1. false
2. false
3. TRUE
4. FALSE
5. TRUE
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In the short run, which one of the following causes a competitive firm to hire more labor?
A) an increase in wage rate B) an increase in the output price C) a specific tax imposed on the firm's output D) a decrease in the output price
Total net benefits gained in a market
a. minus any side payments equals total revenue from producing the good (or, equivalently, total expenditure on the good) b. is the sum of producer and consumer surplus in that market c. is the difference between consumer surplus and producer surplus in that market d. are maximized when the market price equals zero e. always exceeds the sum of total expenditure on the good and the total cost of providing it