Explain the two main methods used to measure GDP.
What will be an ideal response?
The two methods used to measure GDP are the expenditure approach and the income approach. The expenditure approach measures GDP by adding up the flows of expenditures-consumption, government, gross private domestic investment, and net exports. The income approach measures GDP by adding up the flows of income-wages, interest, rent, and profits.
You might also like to view...
A photograph processing machine company requiring customers that buy a processing machine to purchase chemicals and photographic paper from them is an example of
A) bundling. B) a requirement tie-in sale. C) quantity discrimination. D) a two-part tariff.
An example of moral hazard is
a. people drive less carefully in icy conditions with antilock brakes than without b. people drive as safely with more airbags as without c. football players avoid 'spearing' with their heads even with safer helmets d. people read the medicine warnings as carefully when self-medicating as with a doctor's prescription
Which of the following examples would use the three-step method?
a. Elena wants to determine what the marginal revenues are for her clothing store. b. Ivan wants to find out if his toy store is earning an economic profit. c. Jan wants to determine what the marginal costs are for his sports store. d. Zofia wants to find out if her thrift store is earning more total revenue than a competitor’s store.
Holding other factors constant, if new environmental regulations increase firms' cost of operating capital, then the real interest rate will ________ and the equilibrium quantity of national saving and investment will ________.
A. increase; decrease B. decrease; increase C. increase; increase D. decrease; decrease