ECON 2143 Test 2

in the actual economy, households

divide their income among spending, taxes, and saving

the level of real GDP is a good measure of:

economic prosperity

the CPI and GDP deflator:

generally move together

GDP is defined as

the market value of all final goods and services produced within a country in a given amount of time

economic profit is

total revenue minus total cost (including both explicit and implicit costs)

accounting profit is

total revenue minus total explicit cost

in the long run with free entry and exit and identical firm, are competitive firms' profits positive, zero, or negative?

zero (?)

when marginal cost (MC) is less the average total cost (ATC):

ATC is falling

which is greater? Economic or Accounting profit?

Accounting profit

(T/F) the average fixed cost (AFC) curve is constant.

False (?)

What's catch up growth?

If a country is poor, they can become rich if their GDP grows by a high percent each year

(T/F) Group of goods and services used to compute the GDP deflator changes automatically over time, but the group of goods and services used to compute the CPI does not.

True (?)

In function Y= AF(L,K,H,N) what do the letters represent?

Y= Q of output, L= Q of labor, K= Q of physical capital, H= Q of human capital, N= natural resources

the growth of real GDP is a good measure of:

inflation

An example of explicit cost of production:

lease payments for the land on which a firm's factory stands

CPI is calculated:

monthly