What does GDP measure, and what is the formula for calculating GDP using the expenditures approach?
What will be an ideal response?
GDP measures the market value of all final goods and services produced in a country in a given year. Using the expenditures approach, GDP is calculated as the sum of consumption expenditures made by households, investment expenditures made by businesses, government spending, and net purchases by foreigners of domestically produced goods and services.
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Which of the following is the most aggregated value?
A. total output of a city B. total output of an industry C. total output of a country D. total output of a firm
With a natural monopoly, the minimum price a single firm must charge to make a profit:
A. is half the price two or more firms would have to charge. B. is equal to the price two or more firms would have to charge. C. is lower than the price two or more firms would have to charge. D. is always higher than the price two or more firms would have to charge.
Refer to the information provided in Figure 26.3 below to answer the question(s) that follow.
Figure 26.3Refer to Figure 26.3. Hurricane Katrina destroyed a large portion of the infrastructure along the Gulf of Mexico coast. This caused
A. the short-run aggregate supply curve to shift from AS1 to AS0. B. the economy to move from Point B to Point A along AS1. C. the short-run aggregate supply curve to shift from AS1 to AS2. D. the economy to move from Point C to Point B along AS1.
The crowding-out effect arises when:
A. Government lends in the money market, thus decreasing interest rates B. Government borrows in the money market, thus decreasing interest rates C. Government lends in the money market, thus increasing interest rates D. Government borrows in the money market, thus causing an increase in interest rates