Answer the following statements true (T) or false (F)
1. In the expenditures approach, transfer payments such as unemployment compensation are
included in the G component of GDP.
2. National income (NI) is estimated as the sum of four categories of income (wages, rent,
interest, profits) plus taxes on production and imports.
3. Personal income (PI) is the income that households are free to spend or save as they please.
4. Disposable income (DI) includes transfer payments like Social Security benefits and
unemployment benefits.
1. FALSE
2. TRUE
3. FALSE
4. TRUE
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Which of the following shows the combination of two products that have the same utility or satisfaction?
A. Production possibility curve B. Insignificance curve C. Demand curve D. Indifference curve
The manager of a perfectly competitive firm has to decide:
A) the quantity of output the firm should produce. B) the price the firm should charge for its output. C) the quantity of output the firm should produce and the price it should charge. D) neither the quantity of output the firm should produce nor the price it should charge because the market makes both of these decisions.
Between 1914 and 1920, the US price level ______________
a. fell dramatically. b. nearly doubled. c. rose and fell in accordance with intensity of the war. d. remained relatively stable.
Expansion in the size of government relative to the market sector will eventually retard economic growth because
a. larger governments will be more involved in activities for which they are ill-suited. b. the higher taxes to finance a bigger government will lead to larger and larger deadweight losses from taxation. c. the incentive to engage in innovative activities and respond to change is weaker in government than in the market sector. d. all of the above are correct.