The total volume of business sales in our economy is several times larger than GDP because:
A. The GDP does not take taxes into account
B. The GDP excludes intermediate transactions
C. The GDP grossly understates the value of our annual output
D. Total sales are in money terms and GDP is always stated in real terms
B. The GDP excludes intermediate transactions
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The ability of the Federal Reserve to use monetary policy to affect economic variables such as real GDP ultimately depends upon its ability to affect
A) nominal interest rates. B) foreign exchange rates. C) real interest rates. D) tax rates.
Japan experienced periods of deflation—a declining price level—during the 1990s. During a deflationary period, which would be higher: nominal GDP or real GDP? Why? Assume that the base year of choice is prior to the deflationary period
What will be an ideal response?
Explain why taxes on pollutants reduce pollution while subsidies to firms cutting their pollutants actually increase pollution.
What will be an ideal response?
Which of the following is NOT a reason why economists are interested in understanding consumer behavior?
A. Economists are often called upon to evaluate public policies that impact the well-being of consumers. B. It is important for businesses to be able to accurately predict consumers' choices. C. Economists want to understand the conditions under which trade will take place. D. Economists want to predict the value of a company's stock.