Which of the following is the correct formula for computing GDP?
a. GDP = consumption + private investment + government spending + exports - imports
b. GDP = consumption + public investment + government spending + exports - imports
c. GDP = consumption + private investment + government spending - exports - imports
d. GDP = consumption + private investment + government spending + transfers
e. GDP = consumption + private investment + tax revenue + transfers
A
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In the circular flow model, the factors of production flow in the
A) opposite direction as does the goods market. B) opposite direction as does the government. C) same direction as do the rents, wages, interest, and profits. D) opposite direction as do the rents, wages, interest, and profits. E) same direction as does the goods market.
The desirability of an export orientation for development rests on the claim that export industries
a. make better use of domestic resources than do import-substitute industries b. attract foreign investors c. use factors of production that are abundant domestically d. earn more foreign exchange than would be saved by substituting for imports e. all of the above
Other things being constant, if the marginal propensity to save (MPS) is 0.1, and private investment spending falls by $100 million, then real Gross Domestic Product (GDP)
A) increases by $1 billion. B) increases by $90 million. C) decreases by $1 billion. D) decreases by $10 million.
Price elasticity of demand relates to the
a. sensitivity of people's quantity demanded to changes in price b. sensitivity of price to changes in people's quantity demanded c. percentage shifts in demand when price changes d. percentage shifts in demand for every one-percent change in price e. ratio of actual to expected price changes