Related to the Economics in Practice on p. 429: If a Swiss dealer sells a newly made watch it is
A. not counted in either U.S. or Swiss GDP.
B. counted in U.S. GDP.
C. counted in Swiss GDP.
D. counted in U.S. GDP and Swiss GDP.
Answer: C
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When a single firm can supply a product to an entire market at a lower cost than could two or more firms, the industry is called a
a. resource industry. b. exclusive industry. c. government monopoly. d. natural monopoly.
If firms sell less output than expected, planned investment:
A. is greater than actual investment. B. equals zero. C. is less than actual investment. D. equals actual investment.
If GDP is too high relative to potential GDP, which of the following happens?
A. Inflation rises B. Unemployment rises C. A recession begins D. Deflation occurs
Assume that the MPC is 0.85 and investment spending rises by $100 million. How much consumption spending will this generate in the second round of spending?
A. $15 million B. $85 million C. $100 million D. $118 million E. $185 million