If China decides to enact laws to clean up the environment, what would be the effect on GDP?
A) GDP would increase as the environmental costs of pollution were not included in the calculation of GDP.
B) GDP would decrease if the pollution controls reduce productivity by more than the cost of the controls.
C) GDP would increase as the citizens of China were made happier as the environment was cleaned up.
D) GDP would increase reflecting the fact that the environment would be cleaner.
B
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Because Product X has a large positive income elasticity, it is likely that the product
A) has many good substitutes. B) has few good complements. C) is a necessity. D) is a luxury.
How are net exports and the government sector balance linked?
What will be an ideal response?
Assume that business investment spending rises, and the increase is funded by greater borrowing in the capital markets. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and current international transactions balance in the context of the Three-Sector-Model? a. The GDP Price Index falls and current international
transactions balance becomes more negative (or less positive). b. The GDP Price Index rises and current international transactions balance becomes more negative (or less positive). c. The GDP Price Index and current international transactions balance remain the same. d. The GDP Price Index rises and current international transactions balance remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Table 22.1Assume an apple farmer incurs the following costs and revenuesFertilizer$200Seeds$75Water$250Wages$750Property taxes$600Interest payments on borrowed funds$1,200Sales of apples$4,000Suppose the entrepreneur could earn $800 as an employee elsewhere. This means the entrepreneur is earning
A. Accounting losses. B. Breakeven profits. C. Economic losses. D. Economic profits.