Consider two items that might be included in GDP: (1) the estimated rental value of owner-occupied housing and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
a. Both item (1) and item (2) are included in the consumption component of GDP.
b. Item (1) is included in the consumption component of GDP, while item (2) is included in the investment component of GDP.
c. Item (1) is included in the investment component of GDP, while item (2) is included in the consumption component of GDP.
d. Only item (2) is included in GDP, and it is included in the investment component.
b
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What will be an ideal response?
Refer to Figure 4-9. What is the size of the unit tax?
A) $8 B) $5 C) $3 D) cannot be determined from the figure
The concepts of exogeneity, strict exogeneity, and predeterminedness
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Government stabilization policy
a. cannot influence investment spending. b. can stimulate aggregate demand and thereby induce businesses to invest, but the amount is not totally predictable. c. can stimulate aggregate demand, but investment spending will not be affected. d. can stimulate aggregate demand, but only in the long run.