The reason economists include only the value of final goods and services when they calculate GDP is that intermediate goods:
A. do not add to economic welfare.
B. do not create value added.
C. would be double counted otherwise.
D. have no social value.
Answer: C
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Farmer Ken in Kentucky can raise either 80 pounds of tobacco or 40 bushels of cotton on an acre. Farmer Calvin in California can raise either 150 pounds of tobacco or 50 bushels of cotton on an acre. Which farmer can produce tobacco more efficiently?
a. Farmer Ken in Kentucky. b. Farmer Calvin in California. c. The two farmers are equally efficient at growing wheat. d. More information is needed to determine comparative advantage.
Refer to Figure 8A.2. If the economy were originally saving at the rate s1 but changed to the rate s2
A) depreciation will not catch up to total saving. B) capital deepening will continue past K2. C) the economy stops growing at e1. D) saving exceeds depreciation at K1.
Suppose the fixed cost of building a nuclear power plant is $1 billion. Suppose also that the only variable cost is the labor of Homer Simpson, and he earns $10 per hour. If the plant generates 1,000 kilowatts each hour, and has already generated 1 billion kilowatts, what can you say about the marginal cost of the next kilowatt?
a. b and e. b. The marginal cost is equal to $.01. c. The marginal cost is equal to $1.01. d. The marginal cost is rising. e. The marginal cost is falling.
The two economists associated with the development of the theory of monopolistic competition were
A) Joan Robinson and Edward Chamberlin. B) David Hume and Adam Smith. C) John Neville Keynes and John Maynard Keynes. D) Carl Menger and Eugen Von Bohm-Bawerk.