Which of the following statements about gross domestic product and gross national product is true?
a. Gross domestic product includes income payments to foreigners for their work domestically; gross national product does not.
b. Gross domestic product includes the income earned abroad by domestic citizens; gross national product does not.
c. Gross domestic product includes exports; gross national product does not.
d. GDP and GNP are equal.
A
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Use the aggregate expenditures model and the following values to answer the next question. AMPCIGT$7500.5$1,000$1,000$500Determine equilibrium consumption for this economy.
A. $3,500 B. $3,250 C. $3,000 D. $2,500
If Valerie purchases ankle socks at $5 and gets 25 units of marginal utility from the last unit, and bandanas at $3 and gets 12 units of marginal utility from the last bandana purchased, she
A) wants to consume more bandanas and fewer ankle socks. B) is maximizing total utility and does not want to change her consumption of ankle socks or bandanas. C) wants to consume less of both ankle sock and bandanas. D) wants to consume more ankle socks and fewer bandanas.
Refer to the above figure. A price ceiling has been set at P1, and a black market has opened. The equilibrium black market price will be
A) below P1. B) between P1 and P3. C) above P3. D) P2.
Which of the following most completely describes the workings of the aggregate expenditures model?
a. If aggregate expenditures are less than aggregate output, then there is unplanned inventory accumulation, and real GDP will decrease. b. If aggregate expenditures are greater than aggregate output, then there is unplanned inventory depletion, and real GDP will increase. c. Aggregate output generates an equal amount of aggregate spending. d. Both a. and b. above are correct.