Which of the following is a shortcoming of GDP?
A. GDP measures nonmarket transactions.
B. GDP includes an estimate of illegal transactions.
C. GDP includes an estimate of the value of household services.
D. GDP does not account for the distribution of consumption across a country's population.
Answer: D
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If the Fed sterilizes the purchase of foreign assets,
A) the monetary base is left unchanged. B) the monetary base rises by the amount of the purchase. C) the monetary base falls by the amount of the purchase. D) the monetary base may rise, fall, or remain unchanged depending on the reaction of domestic interest rates to the purchase.
Tariffs are frequently used in less-developed countries because _____
a. the governments need more revenue b. the governments want to encourage exports c. the governments find it easier to monitor border transactions than interior transactions d. the governments prefer to tax goods over services
Julie is in the 28 percent tax bracket. She earns an 8 percent rate of return after taxes on a tax-free municipal bond. What will the after-tax rate of return be on a taxable bond (with equal risk)?
a. 36 percent b. 28 percent c. 14 percent d. 8 percent
The sales tax is the most important source of _____ government revenue.
A. federal B. state C. local