When calculating gross domestic product (GDP), double counting can be avoided by:
a. taxing corporate income.
b. adding all income taxes to GDP.
c. calculating GDP using the income as well as the expenditure method.
d. adding the value of exports to GDP and subtracting the value of imports.
e. summing the value added at each stage of production.
QUESTION 2Which of the following can shift the labor demand curve to the right?
a. Decrease in product price.
b. Increase in wages.
c. Decrease in wages.
d. Decrease in the MP.
e. Increase in productivity.
QUESTION 3The steeper the short-run aggregate supply curve, _____.
a. the smaller the impact of a shift in aggregate demand on equilibrium output
b. the larger the value of the spending multiplier
c. the larger the impact of a shift in aggregate demand on equilibrium output
d. the smaller the change in government spending needed to achieve the desired change in equilibrium output
e. the flatter the aggregate demand curve
QUESTION 4When a firm produces and sells a refrigerator worth 1,000, its contribution to the gross domestic product (GDP) on the income side is measured by:
a. the price paid by the consumer.
b. the investment made by the firm to manufacture the refrigerator.
c. the stock of inventories used by the firm to manufacture the refrigerator.
d. the cost of raw materials used by the firm to manufacture the refrigerator.
e. the sum of the wages, interest, and rent paid by the firm's owners and the profit of the firm.
QUESTION 5If the demand for the finished product increases, the:
a. demand for the resources will increase.
b. demand for the resources will decrease.
c. marginal factor cost will increase.
d. marginal factor cost will decrease.
e. MP will increase.
QUESTION 6If the economy is already at its potential output, then the spending multiplier is:
a. zero in the long run.
b. infinite in the long run.
c. equal to 1 in the long run.
d. zero in the short run.
e. equal to 1 in the short run.
QUESTION 7If an economy produces final output worth 5 trillion, then the aggregate income generated by that production:
a. will be 5 trillion.
b. will be more than 5 trillion.
c. will be 5 trillion minus taxes.
d. will be less than 5 trillion.
e. will be 5 trillion plus transaction costs.
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