Why is GDP overstated in terms of the environment?
What will be an ideal response?
GDP does not account for the environmental degradation that results as a part of production in some industries. This pollution can take the form of noise, dirty air, polluted water, toxic waste, or congestion. Even though pollution is a cost of production, firms are not forced to pay these costs because pollution is no excusable, but rather occurs in commonly used space such as the atmosphere, water system or roads. These costs are ignored when calculating GDP and the overstatement of benefits is exaggerated by including the money spent to clean up pollution in GDP.
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Based on the data in the table above, what is the value of M2?
A) $2,950 billion B) $4,187 billion C) $7,978 billion D) $8,587 billion
Briefly describe the potential negative effects of increasing government purchases rather than decreasing taxes during a recession.
What will be an ideal response?
The exchange rate of Country X is set by government decisions and maintained by government actions. Country X follows a
A. floating exchange rate policy. B. free market exchange rate policy. C. pegged exchange rate policy. D. fixed exchange rate policy.
If a country is currently producing at a production point such that the trade line has a slope that is flatter than the slope of the PPC at the same point, then
A) the country can get greater gains from trade if it moves production away from the good on the vertical axis. B) the country can get greater gains from trade if it moves production toward the good on the vertical axis. C) the country cannot improve on its gains from trade. D) There are no gains from trade in this example.