Indicate whether the following transactions would be included in GDP. If they are included, indicate which component (consumption, investment, government consumption and gross investment, or net exports) of GDP would be affected
a. A Czech student attending school in Florida takes a summer job as a lifeguard.
b. A New York company buys welding equipment from a St. Louis firm to help it build jet fighters.
c. The IRS purchases a new computer from the GATS computer company (an American-owned business producing and operating in Germany) that will allow it to better detect income tax evasion.
a. This counts as production of consumption services (life saving) in GDP.
b. This counts as an investment expenditure in GDP.
c. This counts as government gross investment in GNP but does not affect GDP.
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GDP measured with constant prices is referred to as
A) real GDP. B) nominal GDP. C) the GDP deflator. D) industrial production.
Evren wants to go into the donut business. For $500 per month he can rent a bakery complete with all the equipment he needs to make a dozen different kinds of donuts (K = l, r = 500). He must pay unionized donut bakers a monthly salary of $400 each
He projects his monthly production function to be Q = 5KL where Q is tons of donuts. a. With the current level of capital, what is the marginal product of labor? Is the marginal product diminishing? Explain. b. If Evren wishes to make 25 tons of donuts, how many bakers are required given the current level of capital? How much will it cost to produce this (total cost)? c. Derive Evren's short-run cost function with K=1. d. Derive the marginal cost curve from your answer to c. and show the relationship between the marginal cost and marginal product of labor.
As income levels rose moderately last year in the San Jose area, it was observed by local realtors that housing sales increased substantially. It is clear from this information that, everything else held constant, the income elasticity of demand for houses is _____
a. negative and relatively low b. negative and relatively high c. positive and relatively low d. positive and relatively high e. neither positive nor negative
In a measure of aggregate expenditures for the national economy, net exports
a. are always positive. b. are always negative. c. may be either positive or negative. d. are not counted.