What adjustments must be made to total income to make it equal GDP?
What will be an ideal response?
Total income is net domestic product at factor cost. To convert it to gross domestic product at market prices, we must add the depreciation of capital and add indirect taxes minus subsidies.
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In 2014, China had accumulated approximately $3.8 trillion worth of reserve assets. These $3.8 trillion entered into China's 2014 balance of payments in the:
a. Trade balance. b. Balance on goods and services. c. The total amount did not enter into China's balance of payments. Only changes enter the balance of payments. d. Reserve Account.
Which best describes the Keynesian transmission mechanism when the money supply increases?
A) The interest rate rises; this in turn reduces investment spending, which in turn raises total expenditures and shifts the AD curve rightward. B) The interest rate falls; this in turn stimulates investment spending, which in turn raises total expenditures and shifts the AD curve leftward. C) The interest rate falls; this in turn stimulates investment spending, which in turn raises total expenditures and shifts the AD curve rightward. D) The interest rate falls; this in turn stimulates investment spending, which in turn lowers total expenditures and shifts the AD curve leftward.
Use the above figure. When the budget line rotates from "b" to "c"
A. more units of J and more units of K will be purchased. B. fewer units of J and fewer units of K will be purchased. C. more units of J and fewer units of K will be purchased. D. fewer units of J and more units of K will be purchased.
An economist estimates that with every 20 percent increase in income, the quantity of grapes purchased rises by 11.2 percent. From this information one would conclude that grapes are:
A. a normal good. B. not demanded. C. a luxury. D. an inferior good.