Which of the following is included in the government expenditure component of the expenditure approach to GDP?
A) state government expenditure on local schools
B) transfer payments
C) changes in inventories
D) taxes
A
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Refer to Figure 2-12. What is the opportunity cost of producing one gallon of honey in Tahiti?
A) 1 1/3 gallons of milk B) 0.9 gallons of milk C) 5/6 of a gallon of milk D) 1.2 gallons of milk
Proportional income taxation is distorting because
A) people do all they can to avoid paying taxes. B) the competitive equilibrium is not Pareto optimal. C) firms do all they can to avoid paying taxes. D) the government budget constraint does not hold.
Prior to and during the period of American colonization, the following occurred in Europe:
(a) Feudal rulers found it easy to force peasants and urban producers to work for them as long-distance trade expanded, the costs of warfare increased, and the land/labor ratio increased as consequence of the bubonic plague. (b) Feudal lords shared profits from output with the peasantry and pumped them into investment expenditures, which accelerated agricultural growth. (c) Conflict among lords and peasants led to many peasant and urban revolts, diverting resources away from production and investment. (d) Financial stability enabled the nobility of Europe to foster growth among feudal lands and increase the riches of both rulers and peasants, producing a period of high economic growth.
In fact, several studies focused on Europe concluded that higher exchange rate volatility:
A) is associated with smaller price differentials. B) is associated with larger price differentials. C) often precedes a return to stability. D) promotes trade and cooperation among nations.