Table 5.1National Income Accounts (dollar figures are in billions)Expenditures for consumer goods and services$4,565Exports$740Government purchases of goods and services$1,465Social Security taxes$510Net investment$225Indirect business taxes$520Imports$825Gross investment$865Corporate income taxes$185Personal income taxes$750Corporate retained earnings$45Net foreign factor income$20Government transfer payments to households$690Net interest payments to households$0On the basis of Table 5.1, gross domestic product is
A. $7,635 billion.
B. $7,720 billion.
C. $6,980 billion.
D. $6,810 billion.
Answer: D
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If the price of muffins, a normal good you enjoy, rises, then
A) both the income and substitution effects lead you to buy fewer muffins. B) the substitution effect which causes you to decrease your muffin consumption outweighs the income effect which causes you to increase your muffin consumption, resulting in fewer muffins purchased. C) the income effect which causes you to decrease your muffin consumption outweighs the substitution effect which causes you to increase your muffin consumption, resulting in fewer muffins purchased. D) the income and substitution effects offset each other but the price effect leads you to buy fewer muffins.
If credit card balances rise in the economy, then M1 will ________ and M2 will ________
A) decrease; increase B) not change; increase C) increase; decrease D) not change; not change E) increase; increase
Rent seeking is more likely to occur in a family when the parents make their inheritance plans clear by telling the children ahead of time that their estate will be divided equally among the children (and that under no circumstances will the parents change their minds) than when there is more uncertainty with regards to the parents' inheritance plans
Indicate whether the statement is true or false
Exhibit 14A-1 Aggregate demand and supply model
Beginning in Exhibit 14A-1 from long-run equilibrium at point E1, the aggregate demand curve shifts to AD2 . The economy's path to a new long-run equilibrium is represented by a movement from:
A. E3 to E1 to E2. B. E1 to E3 to E2. C. E2 to E1 to E2. D. E1 to E2 to E3.