Government purchases include spending by federal, state, and local governments on:
A. final goods and services.
B. consumer durables, nondurables, and services.
C. stocks, bonds, and other financial instruments.
D. capital goods, residential housing, and changes in inventories.
Answer: A
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The quantity of a public good supplied by a private market is
A) smaller than the efficient quantity. B) equal to the efficient quantity. C) larger than the efficient quantity. D) the quantity that maximizes total public benefit.
Suppose consumer preference for beef starts to rise while the cost of raising beef continues to rise. In the market for beef, this would be represented by the equilibrium price ________ and the equilibrium quantity ________
A) increasing; increasing or decreasing B) increasing or decreasing; increasing C) decreasing; increasing or decreasing D) increasing or decreasing; decreasing
If firms in competitive price-searcher markets are earning economic losses, what effect will the exit of existing firms have?
a. Demand for the product of each firm will be reduced until the losses are eliminated. b. Demand for the product of each firm will increase until all firms earn zero profit. c. Demand for the product of each firm will increase until price is greater than average total cost. d. Demand for the product of each firm will fall until price equals marginal cost.
If average labor productivity increases while population and the number of employed workers remain constant, then total output:
A. decreases. B. may increase or decrease. C. remains constant. D. increases.