What are the different things that are not accounted for in the calculation of the GDP of a country?
What will be an ideal response?
The first major drawback of GDP is the omission of depreciation. The second major drawback is the omission of home production. Another drawback is that black market transactions are not included in the GDP. Externalities and the value of leisure are also omitted from the calculation of GDP.
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In the permanent-income hypothesis incorporating rational expectations, the actual cyclical pattern of consumption in the United States is too ________ to justify the assumption that a current change in income ________
A) smooth, is a poor guide to future income changes B) volatile, is a poor guide to future income changes C) smooth, leads to a gradual change in permanent income D) volatile, leads to a gradual change in permanent income
When producers price their items, they should realize there will usually be a consumer surplus when the items are sold. What does this mean to them?
a. They should price items one dollar above the market equilibrium price. b. They should price items somewhat higher than what consumers are willing to pay for them. c. They should price items exactly at what consumers are willing to pay for them. d. They should price items somewhat lower than what consumers are willing to pay for them.
The figure below illustrates the market for British pounds. D£ and S£ are the nonofficial demand and supply curves of the British pounds, respectively.
At an exchange rate of $2.50 per pound, there is an
A. excess demand for 0.5 million pounds. B. excess supply of 1 million pounds. C. excess demand for 1 million pounds. D. excess supply of 0.5 million pounds.
In economics, an organization that produces a good or service is called a
A) firm. B) company. C) business. D) All of the above are correct.