GDP accounting ignores
A) all non-market forms of production.
B) illegal (black market) production.
C) economic value added.
D) all of the above.
D
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A curve/line that shows combinations of goods among which a consumer would not desire one combination of goods to another combination of goods on that curve/line is called
A) a budget line. B) an indifference curve. C) a utility possibilities curve. D) a demand curve.
Suppose the wiz-pop market is in long-run equilibrium. Suddenly, fixed costs decrease, although variable costs remain unchanged. Discuss the short-run and long-run changes in market equilibrium.
What will be an ideal response?
Suppose that production for good X is characterized by the following production function, Q = K0.5L0.5, where K is the fixed input in the short run. If the per-unit rental rate of capital, r, is $15 and the per-unit wage, w, is $25, then the average fixed cost of using 9 units of capital and 81 units of labor is:
A. $75. B. $80. C. $5. D. There is insufficient information to determine the average fixed costs.
Exhibit 5-10 GDP data (billions of dollars) Indirect business taxes$ 600 Depreciation950 Change in business inventories50 Compensation of employees5,400 Corporate profits700 Durable goods600 Exports100 Social Security taxes360 Transfer payments300 Fixed investment950 Government spending800 Imports150 Net interest500 Nondurable goods2,000 Personal taxes1,000 Rental income200 Services4,000 In Exhibit 5-10, and using the income approach, GDP equals
A. $8,350 billion. B. $9,710 billion. C. $5,400 billion. D. $8,400 billion.