Bryan Mackenzie, from Los Angeles, California, is an independent computer consultant. Companies all over the world hire him to design their computer systems. Are the services he renders in Tokyo, Japan, included in the United States GNP? Are they included in the United States GDP? Explain your answers
These services are part of the United States GNP, because they are produced using American resources
(Bryan's talents). They are not included in the United States GDP, because they were not produced within
the borders of the United States.
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As a percentage of GDP, the largest deficits in the twentieth century
A. were caused by huge tax cuts in the 1980s. B. resulted from spending increases in the 1990s. C. resulted from World War II. D. resulted from the Vietnam War.
The annual income that can be consumed without diminishing the total capital assets of a nation is
(a) purchasing power parity income. (b) sustainable national income. (c) environmental capital stock. (d) per capita income.
Suppose you are the manager of a local water company, and you are instructed to get consumers to reduce their water consumption by 10 percent. If the price elasticity of demand for water is 0.25, by how much would you have to raise the price of water?
A. 10 percent B. 25 percent C. 40 percent D. 100 percent
In Figure 1 below if the economy were at Y2 then we would expect there to be:
A. a reduction in inventories.
B. an increase in inventories.
C. no change in inventories.
D. an increase in consumption spending.