All Else Constant, an Outbreak of Avian Flu

question 80

Multiple Choice

All else constant, an outbreak of avian flu

• A) is likely to increase GDP because it drives up health-care spending.
• B) is likely to decrease GDP because output is likely to fall.
• C) is unlikely to affect GDP.
• D) is likely to increase government transfer payments.

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Definitions:

Stare Decisis

“Standing by the decision” a principle stating that rulings made in higher courts are binding precedent for lower courts.

Watered Stock

Stock that is issued to individuals below its fair market value.

Fair Market Value

The price a willing buyer would pay a willing seller in a transaction where both parties have reasonable knowledge of the relevant facts and neither is under compulsion to act.

No-Par Stock

Shares issued without a nominal or face value, where the value is determined by the price investors are willing to pay.