Geri purchases a newly constructed house built by a private contractor. Her spending on the house is included in GDP as a part of
a. personal consumption expenditures.
b. depreciation.
c. gross private investment.
d. personal saving.
C
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When economists refer to the role of money as a unit of account, they mean that
A) most accounting systems reflect that goods are purchased with currency. B) most accounting systems reflect that goods are purchased with checks. C) money gives traders a way of measuring value in the economy. D) money makes it possible for specialization to take place.
The manager of Steel Works learns of a new technological interdependency between the first stage and the intermediate stage of production. If Steel Works currently contracts with another firm for the first stage of production, which of the following is true?
A) The manager has more of an incentive to integrate backward. B) The manager has more of an incentive to integrate forward. C) The manager has less of an incentive to integrate backward. D) The manager has less of an incentive to integrate forward.
One reason we need government, even in a market economy, is that
a. there is insufficient market power in the absence of government. b. property rights are too strong in the absence of government. c. the invisible hand is not perfect. d. Both a and b are correct.
How much additional money will be created if you deposit a $200 check into your bank, which holds a 10% reserve ratio?
A. $200 will be created since your checking account balance has increased by $200 B. $180 since the bank will keep 10% of your $200 check in reserves and lend the other 90% C. $2,000 since the money multiplier will be equal to 10 and reserves have increased by $200 D. No money will be created since the $200 check does not represent an increase in reserves