Which of the following is a component included in the measure of GDP, according to the income approach?
A. Investment.
B. Personal savings.
C. Interest.
D. Consumption expenditures.
Answer: C
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Adjusted for risk, interest rate parity
A) holds only for larger countries. B) holds only between the U.S. and Canada. C) holds only when purchasing parity holds. D) always holds.
Which of the following will cause an increase in aggregate demand within the AS/AD model?
a. a decrease in prices b. a decrease in the real interest rate c. a decrease in consumer optimism as measured by the consumer sentiment index d. a decrease in foreign incomes abroad
The Fed increases the reserve requirement, but it wants to offset the effects on the money supply. Which of the following should it do?
a. sell bonds to increase reserves b. sell bonds to decrease reserves c. buy bonds to increase reserves d. buy bonds to decrease reserves
Briefly explain what effect a reduction in the saving rate will have on growth
What will be an ideal response?