An economy produces 1,000,000 computers valued at $2,000 each. Households purchase 200,000 computers, of which 100,000 are imported. Businesses purchase 300,000 domestically produced computers, the government purchases 300,000 domestically produced computers, and 100,000 domestically produced computers are sold abroad. At the end of the year, the computer manufacturers hold the unsold computers in inventory. What is the value of the investment component of GDP?
A. $1.0 billion
B. $0.9 billion
C. $0.8 billion
D. $0.6 billion
Answer: A
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Contractionary fiscal policy is enacted when the overall effect of decisions about taxation and spending is to:
A. reduce aggregate demand. B. increase aggregate demand. C. reduce aggregate supply. D. increase aggregate supply.
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A. produced in and purchased by residents of the home country. B. produced in and sold to the residents of a foreign country. C. produced in the home country and sold in another country. D. produced in a foreign country and purchased by the residents of the home country.
Scientific research is subsidized by the government because:
A. it yields benefits to consumers and producers who did not participate in the research. B. researchers are underpaid by private firms, so the government must make up the difference. C. much scientific research takes place at state-funded universities. D. scientific research has no market value and so would not be undertaken without government intervention.