Why are transfer payments excluded from government expenditure in the national income accounts?
What will be an ideal response?
Given the definition of GDP, only expenditures related to the current production of goods and services are included in the national income accounts.
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Infant industry protection requires
A) a positive technological externality. B) a national security externality. C) time limited protection. D) Both A and B. E) Both A and C.
If a cartel is unable to monitor its members and punish those firms that violate the agreement, then
A) the member firms will each act as price setters. B) the cartel will prosper in the long run. C) the market will become a monopoly. D) the cartel will fail.
If the Federal Reserve wanted to expand the money supply in order to increase output, it should
a. sell government bonds, which will increase the money supply; this will cause interest rates to fall and aggregate demand to rise. b. buy government bonds, which will increase the money supply; this will cause interest rates to fall and aggregate demand to rise. c. increase the discount rate, which will raise the market rate of interest; this will cause both costs and prices to rise. d. decrease taxes, which will reduce costs and cause prices to fall.
What stage of the business cycle would be most appropriate to describe the years from 1929 to 1933?
(A) A contraction (B) A peak (C) An expansion (D) A trough