Whichofthefollowing statementsisaccurate i

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Unformatted text preview:   12. Whichofthefollowingstatementsistrue? a. Short ­runeconomicfluctuationsaremadeworsebecausepricesareflexible. b. Short ­runeconomicfluctuationswouldbelesssevereifpriceswereinflexible. c. Ifpriceswerefullyinflexible,therewouldbenoshort ­runeconomicfluctuations. d. Ifpriceswerefullyflexible,therewouldbenoshort ­runeconomicfluctuations causedbydemandshocks. Answer:D 4 13. In 2007, Corny Company grows and sells $2 million worth of corn to Tasty Cereal Company, which makes corn flakes. Tasty Cereal Company produces $6 million worth of corn flakes in 2007, with sales to households during the year of $4.5 million. The unsold $1.5 million worth of corn flakes remains in Tasty Cereal Company’s inventory at the end of 2007. How much do the transactions just described contribute to the GDP for 2007? a. $4.5 million b. $6 million c. $6.5 million d. $8 million Answer:B  14. Suppose there...
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