E&S Cooling Co. installs air conditioning systems in new houses for homebuilders and replacement systems for homeowners. Sales of which systems are included in this year’s GDP?
A. Sales of replacement systems
B. Sales of both systems
C. Sales of systems in new houses
D. Neither system would be included, because they are always intermediate goods
Answer: A
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Which of the following is NOT a characteristic of a private good?
a. rivalry in consumption b. benefits of consumption are nonexcludable c. consumption of the good precludes consumption by another individual d. the benefits to a consumer of consuming the good are exclusive to that individual
Refer to the above diagram. If the production possibilities curve of an economy shifts from AB to EF, it is most likely the result of what factor affecting economic growth?
A. An efficiency factor. B. A demand factor. C. An allocation factor. D. A supply factor.
Which of the following is an example of crowding out?
a. An increase in government spending increases interest rates, causing investment to fall. b. A decrease in private savings increases interest rates, causing investment to fall. c. A decrease in the money supply increases interest rates, causing investment to fall. d. An increase in taxes increases interest rates, causing investment to fall.
Students who go to college when they are younger face a lower opportunity cost of education because
A. younger people are willing to live at a lower standard of living with less expensive housing and other goods. B. younger people find it easier to learn, so going to college does not take as much effort as it does for someone who is older. C. younger people can borrow money for college, and older people cannot. D. wages are lower for younger people, so they are giving up less in earnings when they spend time in school.