Why do we not count the value of intermediate goods and services in gross domestic product? Does the value of intermediate goods and services show up in gross domestic product? If so, how?
What will be an ideal response?
We would double count if we counted directly the value of intermediate goods and services, because their value shows up in the value of the final goods and services in which they are a part.
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Which of the following is NOT included in the money supply when the transactions approach is used?
A) currency B) traveler's checks C) money market deposit accounts D) transaction deposits
If the United States starts to import a good that had previously been produced in the United States, the market price of the good in the United States
A) rises. B) falls. C) remains constant. D) either remains constant or rises, depending on how whether the supply of the good stays the same or increases. E) There is not enough information to answer the question because we need to know if the market price in the United States had been above or below the world market price before trade began.
If additional domestic production will lead to positive spillover effects, then an import tariff that increases domestic production would better adhere to the specificity rule than would a government subsidy to domestic production.
Answer the following statement true (T) or false (F)
The deficit (as a fraction of GDP) is anticipated to rise over the next several decades due to projections of
A) increased defense spending. B) increased spending on entitlements. C) increased inflation. D) decreased corporate tax revenues. E) decreased income tax revenues.