Which of the following observations concerning GDP calculations is true?
A. Goods and services produced by governments are valued at market price.
B. Inventories are treated as if they are yet to be sold.
C. Goods produced but not sold during the year are counted in that year’s GDP.
D. Goods that firms add to their inventories do not count in the GDP.
Answer: C
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Advertising claiming superior quality of a product makes its demand
a. More elastic b. Less elastic c. Perfectly elastic d. None of the above
Suppose that the economy has witnessed an 8 percent increase in its money supply over the last few years and the Fed now announces a plan to increase the money supply by 4 percent per year. What will be the public response, assuming that the Fed has a reputation for always implementing its announced plans?
a. High-wage contracts will prevail, and the economy will experience lower inflation at the cost of higher unemployment. b. High-wage contracts will prevail, and the economy will experience lower unemployment at the cost of higher inflation. c. Low-wage contracts will emerge, and the economy will experience lower inflation with no change in the unemployment rate. d. Low-wage contracts will emerge and the economy will experience higher unemployment with no change in the inflation rate. e. Low-wage contracts will emerge, and the economy will experience lower inflation at the cost of higher unemployment.
Economists argue that in treating patients:
A. physicians should use any test or procedures that might help the patient. B. health care should not be rationed by physicians because it is an entitlement or right. C. both benefits and costs should be taken into account by physicians. D. physicians should use any test or procedure whose marginal benefit is positive.
Surveys show that a small increase in the price of organic potatoes will cause most people to switch to other alternatives such as packaged mashed potatoes. This finding suggests that the demand curve for organic potatoes is
a. relatively steep. b. relatively flat. c. upward sloping. d. vertical.