Gross Domestic Product
1. Define business inventories and explain how they are counted in GDP.
Business inventories are the products that have been built but not sold. They are counted in the
GDP because if
1. Suppose a market basket of goods and services includes the goods below for two successive
years. What is the consumer price index for 2013? Explain.
2012 Unit Price 2013 U
Scarcity and Opportunity Cost
1a. If you choose to go to the beach your opportunity cost would be studying for
your exam and receiving a good grade on it.
If you choose to study for your exam your opportuni
If any determinant changes, other than price level, the entire curve (either AD or AS) will shift.
A shift of the curve (either AS or AD) to the right indicates that more of the good or service will be
demanded or supplied at every price level.
A shift t
Money from the tourist of course starts off at the Factor Market because the factor market provides the
income the tourist can spend. From there the tourist can either save their money (goes to the financial
market) or they can spend it on their trip, mak
The Expenditure and Tax Multipliers
1) Assume that Carl and Wanda each make $40,000. Each was given a raise of $4,000. Carl's spending
increased from $40,000 to $43,000. Wanda's savings increased from $1,00
Comparative Advantage and International Trade
The production possibilities curves above show all the possible combinations of
helicopters and scooters that two towns, Millerville and Jamestown, can create