The value of goods produced, but unsold, in the current period is:
A. allocated to GDP in future periods when the goods are sold.
B. counted in GDP as inventory investment.
C. counted in GDP as consumption spending.
D. excluded from GDP.
Answer: B
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The Nifty Gum Co has purchased a large parcel of land for $1 million. The company recently discovered that the land is contaminated and is worthless to all possible buyers. The opportunity cost of the land is
A) $0. B) $1 million. C) some amount greater than $0 but less than $1 million. D) equal to the cost of the factory that was planned to be built there.
An appropriate test of the effectiveness of an economic model is
A) the number of variables contained within the model. B) the model's ability to predict future economic activity. C) the number of economists who have worked on the model. D) the number of assumptions which the economist has made.
Suppose that the quantity of apples sold increases by 30 percent after the price of pears increases by 15 percent. What is the coefficient of cross elasticity of demand?
A. 3.0. B. 1.5. C. 0.2. D. 2.0.
If actual reserves in the banking system are $8,000, checkable deposits are $70,000, and the legal reserve ratio is 10 percent, then excess reserves are:
A. $2,000. B. $500. C. zero. D. $1,000.