The income approach to measuring GDP:
A. uses the factors payments made by businesses to households to estimate GDP.
B. ignores how income is earned and focuses instead on how it is used.
C. adds up all household expenditures to calculate aggregate income and GDP.
D. focuses on how income is spent.
Answer: A
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Which of the following statements is true?
A) Production in a perfectly competitive market is efficient because resources in the market leave those sectors in which price cannot cover their costs of production and enter those sectors where price can cover their costs of production. B) Production in a perfectly competitive market is suboptimal because absence of free entry and exit of firms allows firms to specialize in only one particular industry. C) Production in a perfectly competitive market is Pareto inefficient because the government or a central planner carefully analyzes the needs and requirements of the society and instructs firms on what to produce and in what quantity. D) Production in a perfectly competitive market is Pareto efficient because the government or a central planner carefully analyzes the needs and requirements of the society and instructs firms on what to produce and in what quantity.
We say that money is a unit of account because it represents:
A. a certain amount of purchasing power held over time. B. something you can use to purchase goods and services. C. something you can directly offer, like any good or service, in exchange for some good or service you want. D. a standard unit of comparison.
Last year, an economy produced 2400 bananas, 3000 satsumas and 2500 peaches. The price of bananas was €0.50, the price of satsumas was €0.60 and the price of peaches was €0.50. Nominal GDP was:
(a) € 5200. (b) € 6600. (c) € 4250. (d) Cannot be computed.
If the price of margarine falls, the demand for butter will
A. decrease. B. remain unchanged. C. increase. D. rise at first and then fall.