Consider the following:Farmer Jones bought seed and fertilizer for $100.He grew wheat that he sold to the Harvest Bread Company for $200.Harvest Bread produced and sold bread to the ABC Grocery Store for $250.Consumers bought the bread from the grocery for $400.How much was added to the GDP?
A. $950
B. $550
C. $400
D. $700
Answer: C
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A decrease in taxes will have no effect on real GDP if
A) the tax decrease is offset by an increase in government spending. B) people look at changes in taxes only in the present. C) the Ricardian equivalence theorem holds. D) there is no crowding out.
Which of the following describes the Soviet Union's economy through most of the second half of the 20th century?
A) The Soviet economy grew slowly because of the slow rate of technological change. B) The Soviet economy grew because it added labor through immigration policy in the 1950s. C) The Soviet economy increased capital per worker very slowly from 1950 through 1980. D) The Soviet economy grew rapidly in the latter half of the 20th century.
A production possibilities curve will shift outward or to the right for all of the following reasons EXCEPT
A) an increase in the unemployment rate. B) an increase in the quality of the labor force. C) an improvement in production technology. D) a discovery of a new source of renewable energy.
When the U.S. Treasury sells bonds to the public to finance government spending and then the Fed buys the bonds through open-market purchases, the Fed is
a. monetizing the debt. b. decreasing the money supply. c. decreasing bank reserves. d. increasing the difficulty of raising funds for government spending.