How does the calculation of GDP include the costs of natural resource depletion that occurs when output is produced?
a. The value of resource depletion is added to GDP.
b. The cost of resource depletion is not measured in GDP.
c. The cost of resource depletion is added to real but not nominal GDP.
d. Resource depletion causes GDP to overstate well being.
b
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If nominal GDP is $6.0 trillion and the quantity of money is $1.5 trillion, then the
A) velocity of circulation is 4. B) price level is 4.00. C) price level is 120. D) price level is 110. E) velocity of circulation is 10.
Assume that a perfectly competitive firm faces a fixed wage rate of $4 and a constant per-unit cost of capital of $2. If the marginal product of labor and capital are 16 and 6, respectively, then to maximize profits the firm should
A) use relatively more labor. B) use relatively less labor. C) increase all inputs proportionately. D) decrease all inputs proportionately.
Which of the following would be included in the income approach to calculating U.S. GDP?
a. Wage and salary payments to U.S. workers b. Purchases of automobiles by households c. Government purchases of guns and tanks and bombs d. Purchases of new trucks by Federal Express e. Purchases of new tractors by farmers
Opportunity cost can best be defined as the
a. money cost of a good or service. b. money cost plus interest on money borrowed to buy a good or service. c. cost of the resources used to produce a good or service. d. value of the best alternative forgone when the alternative at hand is chosen.