The main difference between GNP and GDP is:
a. GDP measures a nation's income, and GNP measures a nation's output.
b. Largely in the minds of the public, because economically, there is no difference.
c. GDP measures the income earned from the production of all final goods and services within a nation's borders; GNP measures the income earned by domestically-owned resources from producing final goods and services anywhere in the world.
d. GDP measures a nation's output, and GNP measures a nation's income.
.C
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Fred runs a fishing lodge and has a very profitable business during the summer. In the fall, the number of guests at the lodge starts to decline. Fred should keep the lodge open:
A. only during those months in which his total revenue exceeds his fixed cost. B. all year because his summer profits offset any losses he might have in the winter. C. only during those months in which his total revenue exceeds his total cost. D. only during those months in which his total revenue exceeds his variable cost.
Consider a one-year corporate bond that has a 20% probability of default. The payoff on the bond is $2,000 if the corporation does not default. The interest rate is 10%. If buyers of this bond are risk-neutral, this bond will sell for:
A. $909.09 B. $1,454.54 C. $1,600 D. $400
Refer to the following graph. The price of capital (r) is $20.
What combination of K and L should the firm choose to produce 14,000 units of output at the lowest cost?
A. 180K, 0L B. 180K, 120L C. 60K, 120L D. 90K, 60L E. none of the above
The measure of the cost of a standard basket of goods and services in any period relative to the cost of the same basket of goods and services in the base year is called the:
A. consumer price index. B. consumption cost calculator. C. consumption production index. D. consumer production index.