Suppose an apartment complex is converted to an owner occupied condominium. Suppose that the estimated value of the condominium owners' housing services is now the same as their former rent
A) GDP increases.
B) GDP decreases.
C) GDP is unaffected because neither the rent nor the estimate of the value of housing services is included in GDP.
D) None of the above.
D
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The Ricardian equivalence theorem states that
A) spending on national defense is a direct expenditure offset. B) an increase in government spending by the federal government leads to offsetting reductions in state government spending. C) government spending financed by taxes is equivalent to government spending financed by borrowing. D) an increase in government spending financed by higher taxes has no effect on aggregate demand.
Under what condition are profits maximized?
A) at the rate of output at which marginal revenue equals marginal cost B) at the output rate where marginal cost is greater than marginal revenue C) at the point at which the difference between total revenues and total costs is negative D) at the point at which the difference between price and quantity demanded is greatest