Which of the following will lead to GDP underestimating our true output?
a. Mary begins a catering business
b. James begins drawing Social Security benefits upon his retirement.
c. David accepts a position as a software specialist at Microsoft.
d. Gretchen begins an accounting and bookkeeping service in her home, accepting cash as payment, which is not reported to tax authorities.
d
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Which of the following is true?
A) When real GDP equals potential GDP, both equal nominal GDP. B) Nominal GDP fluctuates around real GDP. C) Real GDP fluctuates around nominal GDP. D) Potential GDP fluctuates around real GDP. E) Real GDP fluctuates around potential GDP.
Profit maximization implies that firms will want to ________
A) accumulate capital while the MPK is greater than the real wage B) accumulate capital while the MPK is greater than the rental price of capital C) accumulate labor while the MPK is greater than the rental price of capital D) accumulate labor while the MPK is greater than the real wage E) none of the above
The rational expectations hypothesis means that
A) economic agents can predict the future. B) economic agents do not make systematic errors. C) everyone expects everyone else to act rationally. D) economic agents reason with expectations.
The purely competitive firm's supply curve:
A. is upward sloping when some inputs are fixed. B. is perfectly inelastic in the short run. C. is horizontal in the long run. D. becomes less elastic in the long run.