In which of the following situations would GDP not change?
A. More and more domestic consumers opt to build a new home, rather than spending the same money on an already existing home.
B. As domestic consumers buy fewer tobacco products, tobacco manufacturers instead sell their products, at the same price, to foreign buyers.
C. Domestic consumers begin to buy less imported wine, and instead spend just as much money on domestically produced wine.
D. Without reducing the number of automobiles sold, domestic automobile producers decide to reduce the number of automobiles they produce, rather than producing cars that would end up as unsold inventory.
Answer: B
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When the Fed uses contractionary policy
A) it does not change the price level. B) the price level rises less than it would if the Fed did not pursue policy. C) it causes inflation. D) the price level rises higher than it would if the Fed did not pursue policy.
Financial crises in advanced economies might start from a
A) debt deflation. B) currency crisis. C) mismanagement of financial innovations. D) currency mismatch.
A schedule of how much of a good people will purchase for a range of possible prices during a specified time period, other things constant, is the definition of
A) supply. B) demand. C) a purchasing contract. D) an economic market.
All else constant, if a nation's potential output doubles in 36 years, its average annual growth rate is
A. approximately 1% B. approximately 2% C. approximately 3% D. approximately 4%