Which of the following is a shortcoming of GDP?
A. GDP excludes changes in inventories.
B. GDP includes an estimate of illegal transactions.
C. GDP excludes nonmarket transactions.
D. GDP excludes business investment spending.
Answer: C
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The effective return from a foreign investment is
A) the domestic interest rate plus the forward premium (discount). B) the foreign interest rate plus the forward premium (discount). C) the nominal interest rate minus inflation. D) the real interest rate.
Bob goes to his favorite hot dog stand, which is offering one hot dog for $2.50 or two for $4.00. Bob’s marginal cost of a second hot dog is
A. $1.00. B. $2.00. C. $1.50. D. $2.50.
If the consumer price index (CPI) in Year 1 was 200 and the CPI in Year 2 was 215, the rate of inflation was:
a. 215 percent. b. 15 percent. c. 5 percent. d. 7.5 percent. e. 8 percent.
A market economy answers the question "how" will goods be produced by focusing on a. dollar votes
b. consumer sovereignty. c. least-cost method of production. d. who can afford these goods.