Describe how the investment component of GDP is distinct from the other components
What will be an ideal response?
Investment is distinct from consumption in that the goods are not used up in the current period, but rather survive into at least one subsequent period as final goods awaiting sale, as intermediate goods awaiting further processing, as capital goods that will be used in the production of other goods, or as residences. They are purchases by households and businesses, rather than government. Some investments involve purchase of imports, but these are subtracted in the net export component, so that only domestic production is counted in GDP.
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What is typically not considered a characteristic of a central bank?
a. The bank backs its currency with gold or silver. b. The bank has considerable control over the stock of money and uses this control to moderate fluctuations in credit conditions and prices. c. The bank regulates other banks. d. The bank lends a lot of money to the government. e. The bank serves as a lender of last resort to other banks by lending them money when no one else will.
Most recessions last approximately three years
a. True b. False
When statisticians fail to take into account improvements in the quality of goods and services, the CPI will tend to ________ the rate of inflation.
A. overstate B. be unrelated to C. precisely measure D. understate
Linda earns an income of $3,000 per month. She saves 10 percent and spends the remainder on food, lodging, and other expenses. So far, she has managed to save $20,000. What is her consumption per month?
What will be an ideal response?