The growth of GDP may understate changes in the economy's economic well-being over time if the:
a) distribution of income becomes increasingly unequal.
b) quality of products and services improves.
c) environment deteriorates because of pollution.
d) amount of leisure decreases.
b) quality of products and services improves.
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The biases in the CPI are
A) not important since they are so small. B) important only to economists, not the real world. C) important since they effect nearly 1/3 of federal government spending. D) not important although they are large.
If the contribution from capital growth equals 3 percent and the contribution from productivity growth equals 1.6 percent, GDP will grow by ________
A) 1.6 percent B) 4.6 percent C) 4.8 percent D) an unknown value
In the short run, if a firm operates, it earns a profit of $500. The fixed costs of the firm are $100. This firm has a producer surplus of
A) $500. B) $100. C) $400. D) $600.
Suppose Jack and Kate are at the town fair and are choosing which game to play. The first game has a bag with four marbles in it-1 red marble and 3 blue ones. The player draws one marble from the bag; if it is red, they win $20 and if it is blue, they win $1. The second game has a bag with 10 marbles in it-1 red, 4 blue, and 5 green. The player draws one marble from the bag; if it is red, they win $20; if it is blue, they win $5; and if it is green, they win $1. Both games cost $5 to play. Jack is considering whether to play the first game. If Jack only cares about the expected value of the outcome and does not care about risk, he should:
A. not play the game, since it costs $5 and the expected payoff is $5.75. B. play the game since it costs $5, and the expected payoff is $5.75. C. play the game since it costs $5.75 and the expected payoff is $5. D. not play the game since it costs $5.75 and the expected payoff is $5.