In calculating GDP, governmental transfer payments, such as Social Security or unemployment compensation, are:
A. not counted.
B. counted as investment spending.
C. counted as government spending.
D. counted as consumption spending.
A. not counted.
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The "free-rider problem" of public goods refers to:
a. individuals' refusal to pay taxes. b. individuals' attempts to hide their preferences for collective goods and to avoid paying for them. c. individuals' over-use of collective goods. d. the inelasticity of individuals' demands for public goods.
An example of a good that can be used for money that has intrinsic value is:
A. fish. B. cigarettes. C. gold. D. All of these have intrinsic value.
Which of the following is NOT an example of a negative externality?
A) inoculation against disease B) pollution C) playing a boom box loudly in a crowded park D) rush hour traffic
Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary