Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2, except that business inventories increased by $10 billion. GDP in year 2 is ________.
A. $200 billion
B. $180 billion
C. $190 billion
D. $210 billion
Answer: D
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The Laffer curve shows a relationship between
A) interest rates and investment spending. B) government spending and real Gross Domestic Product (GDP). C) tax rates and tax revenues. D) the price level and real Gross Domestic Product (GDP).
Natural resource cartels such as OPEC are inherently unstable because their members operate with excess capacity and have an incentive to cheat on their output quotas
Indicate whether the statement is true or false
For which of the following goods is the income elasticity of demand likely to be largest?
a. poultry products b. meals at restaurants c. lemonade d. used books e. paperback mystery novels
Does voluntary exchange create wealth?
A) Yes, exchange makes it possible for the trading partners to gain more value from the existing supply of goods and it also makes larger output levels possible. B) Uncertain, it will increase wealth if it creates more goods and services; otherwise it exerts no impact on the wealth of people. C) No, if one person gains, the other party must lose an equal amount. D) No, exchange merely shuffles the existing supply of goods and services among people.