In the real world the expenditure approach to calculating GDP does not always equal the income approach. Explain why
What will be an ideal response?
In the real world it is not possible for accounts to measure every input into either approach precisely. There are difficulties when individuals misreport their incomes on tax returns and it is also difficult to estimate depreciation. For this reason there is a small statistical discrepancy between the two approaches. Accountants have added this statistical discrepancy to national income so GDP totals are equal using the approaches.
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What are the main advantages and disadvantages of organizing a business as a corporation?
What will be an ideal response?
Monetary policy can have substantial effects on the economy even when nominal interest rates are very low
A) since real rates are what affects borrowing and spending decisions. B) by improving borrower and bank balance sheets. C) by reducing transactions costs. D) only when the policy is substantial.
The above figure shows the payoff matrix for two firms, A and B, choosing to produce a basic computer or an advanced computer
Now the payoff of the firm who produces a basic computer falls to 10 if the other firm chooses to produce an advanced computer. Then A) both firms will have dominant strategies. B) Nash equilibria will not change. C) joint profits will be maximized at the Nash equilibrium. D) Firm A and firm B will choose different actions.
Human beings
A) have unlimited wants. B) think they have unlimited wants, but really have limited needs. C) have limited wants, but unlimited needs. D) know what their needs are, but do not know what their wants are.