Exhibit 5-11 GDP data (billions of dollars)
Personal consumption expenditures$4,750
Exports810
Government spending1,400
Social Security taxes600
Depreciation450
Indirect business taxes550
Imports850
Gross private domestic investment900
Corporate income taxes200
Personal taxes800
Corporate profits50
Transfer payments700
In Exhibit 5-11, and using the expenditures approach, gross domestic product (GDP) equals:
A. $7,010 billion.
B. $10,360 billion.
C. $9,660 billion.
D. $7,860 billion.
Answer: A
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A) tax cut will lead to a decrease in GDP B) tax cut will lead to an increase in GDP C) tax cut will lead to an increase in current account deficit D) tax cut will have no effect on GDP
When a country exports a good, the ________ to consumers is ________ the ________ to producers
A) gain; equal to; loss B) gain; larger than; loss C) loss; larger than; gain D) gain; smaller than; loss E) loss; smaller than; gain
With faster inflation, money in the form of ________ becomes more desirable
A) currency B) non-interest-bearing checkable deposits C) interest-bearing checkable deposits D) All of these forms are equally desirable when inflation increases.
Investment in human capital
A) is quite different from and has a much lower return than investment in physical capital. B) is just like investment in physical capital and has a return similar to that earned from other investments. C) is just like investment in physical capital but has a much greater return than do other investments. D) is not comparable to other investments in any way since human capital is embodied in the person.