Using the expenditure approach, GDP is calculated as
A. consumption expenditures + investment expenditures + government expenditures + net exports.
B. wages + interest + rent + profits.
C. consumption expenditures + wages.
D. consumption expenditures + wages + interest.
Answer: A
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
If there are two goods and two countries, then one country can have
A) an absolute advantage in only one good. B) an absolute advantage in both goods. C) a higher opportunity cost of producing both goods. D) a lower opportunity cost of producing both goods.
Other things equal, the demand for a good tends to be more inelastic when
a. there are fewer available substitutes. b. a longer time period is considered. c. the good is considered a luxury good. d. the market for the good is more narrowly defined.
One reason stagflation is difficult to recover from is because:
A. less output requires less inputs to be hired. B. prices tend to adjust more quickly downward than upward. C. wages are sticky downward. D. input prices increase with output prices.