Because GDP does not account for improvements in the quality of goods, the GDP calculation:
A. tends to overstate the true value of output in the United States.
B. tends to understate the true value of output in the United States.
C. provides an accurate value of output in the United States.
D. provides the best measure of output in the United States.
Answer: B
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Which of the following changes would cause American net exports to decrease?
A) A decrease in the real value of the dollar B) A decrease in American income C) An increase in foreign income D) A shift in demand by American consumers away from domestically produced goods
Situation 37-2 Dan and Ann live in the same community and both can participate in two activities, producing and stealing. Refer to Situation 37-2. Both Dan and Ann realize that they are better off producing and not stealing from each other than producing and stealing from each other. They agree not to steal from each other. There is no enforcer of their agreement to not steal. It is likely that
A) Dan and Ann are in a prisoner's dilemma setting. B) Dan is in a prisoner's dilemma setting but Ann is not. C) Ann is in a prisoner's dilemma setting but Dan is not. D) neither Dan nor Ann is in a prisoner's dilemma setting.
Answer the following statement true (T) or false (F)
1) The interest-rate cost-of-funds curve is perfectly elastic because firms can borrow as much or as little as they want at market interest rates. 2) The interest-rate cost-of-funds curve is perfectly elastic because expected rates of return on R&D are constant. 3) Large, well-established firms are more likely to use retained earnings to finance R&D, while small start-up firms are more likely to rely on venture capital. 4) Kara's Kettles, Inc. has developed a new and improved type of cookware. Alex, a typical consumer, will necessarily purchase Kara's new product if his MU/P for the new cookware exceeds that of competing products. 5) According to the inverted-U theory of R&D, other things equal, firms in industries with concentration ratios around 10 percent will be more technologically progressive than firms in industries with 50 percent concentration ratios.
Refer to Figure 4-6. What area represents consumer surplus at the equilibrium price of P1?
A) D + E B) A C) A + B + C + D + E D) A + B + C