When the expenditure approach is used to measure GDP, the major components of GDP are
a. consumption, investment, indirect business taxes, and depreciation.
b. employee compensation, rents, interest, self-employment income, and corporate profits.
c. employee compensation, corporate profits, depreciation, and indirect business taxes.
d. consumption, investment, government consumption and gross investment, and net exports.
D
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"The new goods bias puts a downward bias into the CPI and its measure of the inflation rate." Is the previous sentence correct or not? Explain your answer
What will be an ideal response?
Basket of goods A is on an indifference curve that lies further from the origin than basket B. From this we know that
A. the satisfaction from consuming A is more than the satisfaction from consuming B. B. all other consumers would also rank B above A. C. the marginal utility from consuming A is more than the marginal utility from consuming B. D. the prices of the goods in A are more than the prices of the goods in B.
Nominal GDP, PY, is $7.5 trillion. The quantity of money is $3 trillion. The velocity of circulation is
A) 22.5. B) 10.5. C) 2.5. D) 3.
How does the calculation of GDP include the costs of natural resource depletion that occurs when output is produced?
a. The value of resource depletion is added to GDP. b. The cost of resource depletion is not measured in GDP. c. The cost of resource depletion is added to real but not nominal GDP. d. Resource depletion causes GDP to overstate well being.