One bag of flour is sold for $1.50 to a bakery, which uses the flour to bake bread that is sold for $4.00 to consumers. A second bag of flour is sold to a consumer in a grocery store for $2.00 . Taking these three transactions into account, what is the effect on GDP?
a. GDP increases by $1.50.
b. GDP increases by $3.50.
c. GDP increases by $6.00.
d. GDP increases by $7.50.
C
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One year ago Sam purchased bonds for $100,000 . He just sold them for $120,000 . During the year the price level rose by 5%. If the tax rate on capital gains is 20%, how much did Sam gain in real terms?
The federal income tax is a good example of a
a. regressive tax. b. proportional tax. c. digressive tax. d. progressive tax.
Suppose there are five goods in the economy, A-E. The current-year quantity of each is 10A, 20B, 30C, 40D, and 50E. Current-year prices are $1 for each unit of A, $2 for each unit of B, $3 for each unit of C, $4 for each unit of D, and $5 for each unit of E. Base-year prices are $1 for each good. Real GDP in the current year equals
A) $100. B) $130. C) $150. D) $180. E) $550.
A simple deposit multiplier equal to one implies a required reserve ratio equal to
A) 100 percent. B) 50 percent. C) 25 percent. D) 0 percent.