Which of the following statements is true?
A. GDP is greater than national income, which is greater than NDP.
B. Government spending is the largest sector of GDP.
C. A Social Security check sent to a retiree is counted as part of GDP.
D. The purchase of a new factory is counted in the investment sector of GDP.
Ans: D. The purchase of a new factory is counted in the investment sector of GDP.
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Refer to Figure 5-5. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does D1 represent?
A) the demand curve reflecting social benefits B) the demand curve reflecting the sum of private and social benefits C) the demand curve reflecting private benefits D) the demand curve reflecting external benefits
Suppose the U.S. economy is producing at the natural rate of output. An appreciation of the U.S. dollar will cause ________ in real GDP in the short run and ________ in inflation in the long run, everything else held constant
(Assume the appreciation causes no effects in the supply side of the economy.) A) an increase; an increase B) a decrease; a decrease C) no change; an increase D) no change; a decrease
A cellphone maker sells 6,000 units per month at $600 each. The firm is investigating whether a price cut to $500 is warranted. The firm’s marginal cost of production of each phone is a constant $400 per unit. To maintain profits at their current level, quantity sold must increase to at least
A. 8,000 B. 10,000 C. 12,000 D. 15,000
To what extent should monetary policy be used to fine-tune the economy?