What are transfer payments, and how do they make their way into the GDP calculation?
What will be an ideal response?
Transfer payments are payments to individuals for which no good or service is exchanged in that time period. When individuals receive transfer payments, they typically spend the dollars in the form of consumption; so transfer payments enter GDP through consumption: GDP = C + I + G + Net exports. Transfer payments themselves do not count as part of the GDP calculation, however.
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Which of the following can cause official unemployment figures to underestimate the true unemployment rate?
A) Some people get discouraged and quit looking for a job. B) Some people engage in illegal activities. C) Some people work "off the books." D) Some people work overtime.
Assume that the central bank sells government securities in the open market. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real exchange rate and monetary base in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium. Assume the nominal exchange rate is stated
as: (Foreign currency/ Domestic currency). a. The real exchange rate rises and monetary base rises. b. The real exchange rate rises and monetary base falls. c. The real exchange rate and monetary base fall. d. The real exchange rate and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Which of the following is an example of a barrier to entry?
a. Matthew offers free samples of his latest flavored coffee drink to entice customers to buy a cup. b. Mark charges a lower price to students than to faculty for his tattoo services. c. Luke charges a higher hourly price to business students than to liberal arts students for his economics tutoring. d. John obtained a copyright for the song he wrote and recorded.
A consumer increases their consumption from 2 to 4 units of a product.. As it does its total utility rises from 10 to 16 utils. The consumers marginal utility is:
a) 6 utils. b) 2 utils. c) 3 utils. d) 4 utils.