The gross domestic product (GDP) excludes:
a. the value of a new building
b. the value of new stocks and shares.
c. the cost of a new vending machine.
d. government expenditure on a new bridge.
e. the money spent on the purchase of legal services by a household.
b
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Thinking as an economist would, which is TRUE of investment?
A) Investment is putting money into stocks and bonds. B) Investment is a stock concept. C) Investment represents spending on capital goods. D) It is the portion of disposable income that is not used for consumption or saving.
Producer surplus for the whole market can be thought of as
A) total profit. B) variable operating profit plus factor rents. C) total profit minus factor rents earned by lower cost firms. D) total profit plus factor rents earned by lower cost firms.
Steel producers lobbying to keep imports out is an example of:
A. objective cost-benefit analysis. B. rent-seeking behavior. C. rational ignorance. D. corruption.
Believers in fixed rules maintain that
A. with accurate forecasts, we can see inflation coming at least one year ahead of time. B. the length of stabilization lags is not important because fiscal policy actions are taken quickly and the economy feels the effect on aggregate demand quickly. C. we should forget about discretionary policy and put the economy on autopilot, relying instead on automatic stabilizers and the economy’s self-correcting mechanism. D. the economy’s self-correcting mechanism is slow and not very reliable, even with automatic stabilizers.