Answer the following statements true (T) or false (F)
1. If gross investment is positive, it means that firm (or the economy) is must be expanding.
2. Changes in business inventories are included as part of investment in the national income
accounts.
3.In an economy, the value of inventories fell by $50 billion from Year 1 to Year 2. In calculating
total investment for Year 2, national income accountants would increase it by $50 billion.
4. If the University of Missouri, a public school, builds a new laboratory, then it will be counted as
part of I g in GDP.
5. Government purchases are the largest component of aggregate expenditures in the United
States.
1. FALSE
2. TRUE
3. FALSE
4. FALSE
5. FALSE
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Which among the following does not determine the shape of the demand curve for a good under different market structures?
a. Number of substitutes in the market b. Importance of the good in a consumer's budget c. Cost structure of the firm d. Price-elasticity of demand e. The length of time being considered
The long-run aggregate supply curve
a. is vertical b. is upward sloping c. is downward sloping d. is horizontal e. can have a variety of shapes depending on fiscal policy
Which of the following explanations of the business cycle focuses on both aggregate supply and aggregate demand shifts?
A. Monetarist explanations B. Keynesian explanations C. Supply-side explanations D. Eclectic explanations
The opportunity costs associated with the use of resources owned by a firm are:
A. externalities. B. implicit costs. C. explicit costs. D. sunk costs.