GDP does NOT include intermediate goods because
A. intermediate goods are not valuable.
B. intermediate goods are not useful to consumers.
C. that would understate the true size of GDP.
D. that would count the value of intermediate goods twice.
Answer: D
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Sam quits his job as an airline pilot and opens his own pilot training school. He was earning $40,000 as a pilot. He withdraws $10,000 from his savings where he was earning 6 percent interest and uses the money in his new business. He uses a building he owns as a hanger and could rent it out for $5,000 per year. He rents a computer for $1,200, buys office supplies for $500, rents an airplane for
$6,000 . pays $1,300 for fuel and maintenance, and hires one worker for $30,000 . Sam's total revenue from pilot training classes this year equaled $90,400 . Sam's explicit costs this year equals: a. $84,400. b. $39,000. c. $55,000. d. $45,600. e. $40,000.
What shape is the production possibilities curve usually expected to exhibit?
a. Upward-sloping. b. Bowed out. c. Bowed in. d. Straight line. e. U-shaped.
The idea that a shift in aggregate demand affects both inflation and unemployment is consistent with
A. The consensus view of the economy. B. The Keynesian view of the economy. C. A vertical aggregate demand curve. D. The monetarist view of the economy.
Consider a market characterized by the following inverse demand and supply functions: PX = 10 - 2QX and PX = 2 + 2QX. Compute the number of units exchanged and the price at which those units will be exchanged when there is an $8 per unit price floor.
A. 3 units and $6 per unit. B. 3 units and $8 per unit. C. 1 unit and $6 per unit. D. 1 unit and $8 per unit.