Why is the value of the sales of stocks and bonds excluded from GDP?
What will be an ideal response?
The sale of stocks and bonds is simply a change in the ownership of financial assets. The transactions do not create current production and are not included as part of GDP.
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The majority of federal expenditures is spent on
A. National Defense. B. Income transfers. C. Public sector purchases of goods and services. D. Private sector purchases of goods and services.
You have been hired by a data processing firm to provide economic advice. The owner of the firm tells you that the firm's only variable input is the number of data-entry operators. The hourly wage for data-entry operators is $15.00. The marginal revenue product curve for data-entry operators reaches its maximum at three workers with a marginal revenue product of $12.00. What advice would you give this firm?
A. Shut down immediately, as the firm is not able to cover all of its variable costs. B. Produce as much as possible so as to maximize the difference between the wage paid to data-entry operators and their marginal revenue product. C. Increase the wage rate paid to data-entry operators so that their marginal revenue product will increase. D. Hire three data-entry operators so as to minimize the amount of money the firm will lose.
Which of the following is not a coincident indicator?
a. Personal income. b. Industrial production. c. Manufacturing and trade sales. d. All of these.
Kelly is an attorney and also an excellent typist. She can type 120 words per minute, but she is pressed for time because she has all the legal work she can handle at $75 per hour. Kelly's friend Todd works as a waiter and would like some typing work (provided that he can make at least his wage as a waiter, which is $25 per hour). Todd can only type 60 words per minute. a. Kelly should do all
the typing because she is faster. b. Todd should do the typing as long as his earnings are more than $25 and less than $37.50 per hour. c. Unless Todd can match Kelly's typing speed, he should remain a waiter. d. Todd should do the typing, and Kelly should pay him $20 per hour.