How are intermediate goods treated in the calculation of GDP?
A) Their value is not counted separately, but included as part of the value of the final good for which they are an input.
B) Their value is counted separately, and their value is also included as part of the value of the final good for which they are an input.
C) Their value is counted separately, but is not included as part of the value of the final good for which they are an input.
D) They are included only if they are imported.
Answer: A
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Other things remaining same, a right shift in the demand curve will lead to:
A) a decrease in the equilibrium price and the equilibrium quantity. B) a decrease in the equilibrium price and an increase in the equilibrium quantity. C) an increase in the equilibrium price and the equilibrium quantity. D) an increase in the equilibrium price and a decrease in the equilibrium quantity.
Why must the M2 measure of the money supply always be larger than the M1 measure?
What will be an ideal response?
Since the end of World War II, the U.S. price level has: a. increased tenfold
b. increased by an average of 10 percent each year. c. increased and decreased with equal regularity, leaving the price level almost constant. d. increased by 50 percent. e. doubled.
Refer to the diagram. The change in aggregate expenditures as shown from (C + I g + X n1 ) to (C + I g + X n2 ) will produce:
A. a decrease in real GDP.
B. an inflationary expenditure gap if 0D is this nation's full-employment level of GDP.
C. an increase in real GDP if 0A is this nation's full-employment level of GDP.
D. an inflationary expenditure gap if 0B is this nation's full-employment level of GDP.