National defense services provided by the military are:
A. included in GDP at cost.
B. excluded from GDP because they are not sold in markets.
C. excluded from GDP because they are intermediate goods.
D. included in GDP at market prices.
Answer: A
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According to the Keynesian view, if purchasers buy more goods and services than businesses expect,
a. the inventories of firms would decline, and the firms would expand output in order to restore their inventories to desired levels. b. the inventories of firms would increase, and the firms would reduce output until inventories were cut back to the desired level. c. the current level of income would persist in the future. d. firms would reduce their investment, and the economy would fall into a recession.
When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
Holding other things constant, a decrease in the inflation rate in the US compared to the Canadian economy may cause the demand for the US dollar to _____________ and the supply to __________
a. Increase; decrease b. Increase, increase c. Decrease; Increase d. Decrease; Decrease
Suppose the automobile industry can import 10% of the total quantity demanded of cars in the U.S. This is an example of a(n) ________.
A. tariff B. quota C. import tax D. trade limit