Pollution is a by-product of some production processes, so on this count real GDP as measured
A) is adjusted downward to take into account the pollution.
B) is adjusted upward to take into account the expenditures that will be made in the future to clean up the pollution.
C) tends to overstate economic welfare.
D) tends to understate economic welfare.
C
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You observe that an increase in the price of salsa decreases the demand for tortilla chips and increases the demand for potato chips. You can conclude that
A) salsa and tortilla chips are substitutes. B) salsa and potato chips are complements. C) tortilla chips and potato chips are complements. D) salsa and tortilla chips are complements.
In the long run, if an economy's consumption spending is $5 trillion, its planned investment is $2 trillion, government spending is $1 trillion, net tax revenue is $1 trillion, and household savings are $2 trillion, total output should be
a. $3 trillion b. $5 trillion c. $7 trillion d. $8 trillion e. $11 trillion
If two goods are complements, their cross elasticity of demand will normally be
a. zero. b. a negative number. c. a positive number. d. infinity.
The human capital model assumes that
a. education is a productive investment that raises total output. b. education does not change potential productivity, but it does save resources by reducing sorting costs for employers. c. the educational system is a very expensive process to legitimize the intergenerational transmission of privileged status. d. such factors as the love of learning should be included in the analysis.