One problem with using market values to measure GDP is that
A. prices for some goods change every year.
B. market values of exported goods are usually priced in foreign currencies.
C. some useful goods and services are not sold in markets.
D. you cannot compare completely heterogeneous goods by using their dollar values.
Answer: C
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Suppose that in Germany total annual output is worth $600 million and people work 40 million hours. In France total annual output is worth $700 million and people work 50 million hours. In which country do people enjoy a higher standard of living?
Suppose that Canada pegs its currency to the U.S. dollar at a rate of $C1 = $US1 and that Canada is a major exporter of crude oil to the United States. The increase in the price of oil that occurred in the second half of 2007 is likely to:
A) cause Canada to adopt a contractionary monetary policy and the United States to adopt an expansionary monetary policy. B) cause Canada to adopt an expansionary monetary policy and the United States to adopt a contractionary monetary policy. C) cause both Canada and the United States to adopt contractionary monetary policies. D) cause both Canada and the United States to adopt expansionary monetary policies.
Stagflation refers to a situation in which the economy is experiencing:
A. high economic growth and high inflation. B. low economic growth and high inflation. C. high economic growth and low inflation. D. low economic growth and low inflation.
Which of the following is not a valid explanation for government provision and forced consumption of education?
a) myopic individuals make time-inconsistent decisions b) education is a public good c) forced education redistributes income d) education has positive externalities, or benefits to non-consumers e) education enhances human capital and raises GDP