Answer the question on the basis of the following information: Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5. The current year per unit prices of these three goods are A = $2, B = $3, and C = $1. Refer to the above information. If the per unit prices of the three goods each were $1 in a base year used to construct a GDP price index, then the GDP price index in the current year is:
a) 205.5.
b) 255.5.
c) 39.3.
d) 100.
b) 255.5.
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Arguing that economic growth will eventually stop because we will run out of natural resources:
A. ignores the power of markets to recognize shortages and induce changes in behavior. B. must be correct because scarcity exists. C. is supported today by the fact that richer countries have fewer natural resources. D. will only be correct if growth takes the form of newer, more efficient goods and services.
A consumption good that would be counted in GDP would be a:
A. new bicycle. B. vintagebottle of wine purchased at an auction. C. washing machine purchased at a garage sale. D. A newly issued stock.
A tradeoff is illustrated by
A) a point inside the PPF. B) a point outside the PPF. C) a change in the slope of the PPF. D) the negative slope of the PPF.
The welfare effects of a quota depend, to considerable extent, upon
A) who has the quota license. B) the size of the quota. C) elasticities of domestic demand and supply. D) all of the above.