Intermediate goods are NOT included in Gross Domestic Product (GDP) calculations because
A. they are made from foreign raw materials.
B. they have very low value added.
C. they are produced overseas.
D. they are used in the production of final goods and would then be counted twice.
Answer: D
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Refer to Figure 2-2. The linear production possibilities frontier in the figure indicates that
A) it is progressively more expensive to produce meat. B) Mendonca has a comparative disadvantage in the production of meat. C) the tradeoff between meat and vegetables is constant. D) Mendonca has a comparative advantage in the production of vegetables.
Which of the following influences the slope of the LM curve?
A) The interest-sensitivity of money demand B) The interest-sensitivity of investment C) The interest-sensitivity of government spending D) The interest-sensitivity of saving
An example of foreign direct investment is the
A) domestic acquisition of less than 10 percent of a foreign company. B) foreign purchase of more than 10 percent of stock in a domestic company. C) purchase of livestock from abroad. D) sale of insurance in a foreign nation.
What does a "fractional reserve banking system" mean?
(A) One that must keep most deposited money in reserve. (B) One that uses fractional paper currency as well as coins. (C) One that keeps only a small part of customers' deposits on hand. (D) One that is required to report daily deposits to the Federal Reserve.