The Social Security check received by a retired couple
A. is included in the GDP because it is part of her income.
B. is included in the GDP because she is entitled to it as a citizen.
C. is excluded from GDP calculations because it is a transfer payment.
D. is included in the GDP because it will be spent on goods and services.
Answer: C
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In a perfectly competitive market, if supply and demand fully reflect all of the costs and benefits associated with production and consumption, then total economic surplus is maximized when:
A. consumer surplus and producer surplus are equal. B. price controls keep prices low enough that most consumers can purchase the item. C. consumer surplus is greater than producer surplus. D. the market is in equilibrium.
The figure above shows Sam's budget line. Which of the following would result in Sam's budget line rotating inward and not changing its vertical intercept?
A) a decline in his preference for coffee B) a fall in the price of a gallon of gasoline C) a decrease in Sam's income D) an increase in the price of a pound of coffee
Richard Baldwin's estimate was that the euro increased the trade level of its users by
A) only 5 percent. B) only 9 percent. C) over 30 percent. D) over 50 percent. E) only 12 percent.
If the value of the marginal product of labor exceeds the wage, then the firm could
a. increase profit by hiring additional labor. b. increase profit by reducing the amount of labor hired. c. increase revenue by lowering output. d. reduce total cost by hiring additional workers.