If a homeowner sells a kitchen table and chairs that she no longer wants to use and does not report the income earned from the sale to the Internal Revenue Service, the value of GDP is
A. understated because this transaction took place in the underground economy.
B. overstated because the sale of the furniture is counted twice in GDP calculations.
C. unaffected by this transaction because the table and chairs were already counted in GDP as final goods when the homeowner bought them new.
D. understated because this purchase was a nonmarket transaction.
Answer: C
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The difference between a capital good and a consumer good depends on
a. the purpose for which it is used. b. how it was produced. c. when it was produced. d. how quickly it is used up.
Refer to the table below. What is the probability of selling 22 or more cakes?
The above table shows the probability distribution of cake sales at Busy Betty's Bakery.
A) 0.10
B) 0.20
C) 0.60
D) 0.40
The economic justification for public subsidies to university research is based on
a. the value of this research to the university. b. the higher salaries graduate students earn as a result of working with professors involved in research. c. the external benefits of research and development to, in particular, high rates of economic growth. d. higher incomes earned by those who provide services to university researchers (equipment, supplies, etc.).
Which of the following may be used in an attempt to correct market failure?
A. Laws and regulations. B. Government failure. C. Laissez faire price policies. D. The market mechanism.