Chapter 15 Econ Test 3

Because every transaction has a buyer and a seller the expenditure on an economy's goods and services is equal to its income. True False

True

GDP measures both an economy's production and its expenditures. True False

True

In the circular-flow diagram households receive income from wages, rents, and profits. True False

True

In the circular-flow diagram there are two markets one for goods and services, and one for factors of production. True False

True

Real GDP uses constant base year prices to place a value on the economy's production of goods and services, while nominal GDP uses current prices to place a value on the economy's production of goods and services. True False

True

The investment component of GDP includes changes in inventories. True False

True

Both education expenditures and new home construction are included in the consumption component of GDP. True False

False

Factors of production include only physical capital such as business structures and business equipment. True False

False

Last year was the base year, this year inflation was 5%. What is this year's GDP deflator? a. 95 b. 105 c. 1.05 d. .95

b. 105

An increase in total spending from one year to the next means that an economy's production of goods and services has risen. True False

False

A U.S. consumer buys toys made in China. The value of the toys is included only in the consumption component of GDP. True False

False

If real GDP rises and the GDP deflator falls, then it must be that nominal GDP rose. True False

False

If the GDP deflator in 2015 was 210 and the GDP deflator in 2014 was 200, then the inflation rate in 2015 was 10%. True False

False

In the circular-flow diagram households receive income only from wages. True False

False

Nominal GDP is a better gauge of economic well-being than real GDP. True False

False

Suppose a country has government purchases of $3,000, taxes of $2,000, consumption of $9,000, exports of $2,500, imports of $2,700, transfer payments of $750, capital depreciation of $800, and investment of $4,000. GDP equals a. $15,800. b. $17,000. c. $17,550. d. $16,000.

a. $15,800.

A farmer sells $50,000 worth of apples to individuals who take them home to eat, $75,000 worth to a company that uses them all to produce apple juice, and $100,000 worth of apples to a grocery store that sells all of them to households. How much of the farmer's sales will be included as apples in GDP? a. $150,000 b. $175,000 c. $225,000 d. $50,000

a. $150,000

Susan sells a house built several years ago. The house sells for $300,000, but $20,000 of this is her real estate agents' commission fee. How much does this transaction add to GDP? a. $20,000 b. $280,000 c. $300,000 d. $0

a. $20,000

In 2014, a farmer grew and sold $2 million worth of green beans to a company that froze and bagged them. The company produces $4 million worth of bags of frozen beans in 2014, with sales to households during the year of $3 million. The unsold $1 million worth of frozen beans remains in the company's inventory. The transactions just described contribute how much to GDP for 2014? a. $4 million b. $5 million c. $6 million d. $3 million

a. $4 million

In the economy of Urbania in 2019, consumption was $5000, exports were $700, government purchases were $1000, imports were $400, and investment was $1200. What was Urbania's GDP in 2019? a. $7,500 b. $7,200 c. $6,800 d. $7,900

a. $7,500

In 2019 an economy's consumption was $5400, GDP was $9000, government purchases were $1800, exports were $500, and investment was $2000. What were this country's imports in 2019? a. $700 b. $500 c. $300 d. $1200

a. $700

The government of a country, which has adopted American GDP accounting conventions, reported that seasonally adjusted GDP in third quarter was $36 billion at an annual rate. This means that the seasonally-adjusted market value of all final goods and services produced within this country in the third quarter was a. $9 billion. b. $12 billion. c. $36 billion. d. $3 billion.

a. $9 billion.

Question Content Area Which of the following components of GDP include your tuition payments? a. Consumption of services b. Consumption of nondurable goods c. Consumption of durable goods d. Investment

a. Consumption of services

Which of the following statements about GDP is correct? a. GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy's output of goods and services. b. The sum of wages, rents, and profits is less than a nation's income. c. GDP is generally not regarded as a measure of a society's economic well being. d. Money continuously flows from households to firms and then back to households, but GDP does not measure this flow of money.

a. GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy's output of goods and services.

When economists refer to intangible items, they are referring to such things as a. Legal and medical services, and the value of such items is included in GDP. b. Public parks and schools, and the value of such items is excluded from GDP. c. Public parks and schools, and the value of such items is included in GDP. d. Legal and medical services, and the value of such items is excluded from GDP.

a. Legal and medical services, and the value of such items is included in GDP.

A manufacturer produces 500,000 MP3 players in the first quarter of the year. It sells 400,000 of them and adds 100,000 of them to inventory. All the players added to inventory are purchased by consumers in the second quarter. How are the 100,000 that go into inventory counted in GDP? a. The MP3 players will be counted as a change in inventory in the first quarter, and so will be included in first quarter GDP as part of investment. b. Since the MP3 players were purchased by consumers in the second quarter, they will be counted as an increase in second- quarter GDP. c. Since the MP3 players eventually will be bought by consumers, they will be included as consumption in the first quarter. d. The MP3 players will be counted as a change in inventory in the first quarter, and when sold in the second quarter will raise GDP by the value of the MP3 players.

a. The MP3 players will be counted as a change in inventory in the first quarter, and so will be included in first quarter GDP as part of investment.

If a U.S. company buys a computer server made in China by a Chinese firm, and the Chinese firm uses the payment to buy stocks issued by a U.S. company then other things the same a. U.S. imports increase but U.S. exports are unchanged. b. U.S. exports increase, but U.S. imports are unchanged. c. U.S. exports and U.S imports increase. d. U.S. exports decrease, U.S. imports are unchanged.

a. U.S. imports increase but U.S. exports are unchanged.

If the amount U.S. citizens earn abroad is larger than the amount foreign citizens working in the U.S. earn, then a. U.S. net factor payments from abroad are positive, and GNP is larger than GDP. b. U.S. net factor payments from abroad are negative, and GDP is larger than GNP. c. U.S. net factor payments from abroad are negative, and GNP is larger than GDP. d. U.S. net factor payments from abroad are positive, and GDP is larger than GNP.

a. U.S. net factor payments from abroad are positive, and GNP is larger than GDP.

The gross domestic production of a country a. equals the income of its residents. b. is greater than the income of its residents. c. could be less than, equal to, or greater than the income of its residents. d. is less than the income of its residents.

a. equals the income of its residents.

Unemployment benefits are a. excluded from GDP because they do not reflect the economy's current production. b. included in GDP because they represent potential consumption. c. included in GDP because they represent current income. d. excluded from GDP because taxes are raised to finance them.

a. excluded from GDP because they do not reflect the economy's current production.

Net exports equal a. exports minus imports which equals Y - C - I - G. b. exports plus imports which equals C + I + G -Y. c. exports plus imports which equals Y - C - I - G. d. exports minus imports which equals C + I + G -Y.

a. exports minus imports which equals Y - C - I - G.

If the price of a shirt is five times the price of a pair of socks, then a shirt contributes a. five times the price of a pair of socks does to GDP. b. more than five times the price of a pair of socks if shirt-makers make greater profits than sock-makers. c. less than five times the price of a pair of socks if shirt-makers make greater profits than sock-makers. d. exactly as much as a pair of socks does to GDP.

a. five times the price of a pair of socks does to GDP.

In the simple circular-flow model a. households spend all of their income but the government does not buy goods or services. b. households spend all of their income and the government buys goods and services. c. households save some of their income but the government does not buy goods or services. d. households save some of their income and the government buys goods and services.

a. households spend all of their income but the government does not buy goods or services.

Sheri, a U.S. citizen, does some consulting work in Germany. The value she adds to production in Germany is included a. in German GDP, but is not included in U.S. GDP. b. in U.S. GDP, but is not included in German GDP. c. in neither German GDP nor U.S. GDP. d. in both German GDP and U.S. GDP.

a. in German GDP, but is not included in U.S. GDP.

A U.S. company produces bicycle helmets some of which go into inventory, and are not sold during the current period. The helmets that go into inventory are a. included in current period GDP as inventory investment. b. counted as intermediate goods and so are included in current period GDP. c. counted as intermediate goods and so are not included in current period GDP. d. included in current period GDP as consumption.

a. included in current period GDP as inventory investment.

The value of a carwash a. is included in GDP only if it is sold in the market. b. is included in GDP only if a car owner washes her own car. c. is included in GDP whether it is sold in the market or the car owner washes her own car. d. is not included in GDP.

a. is included in GDP only if it is sold in the market.

Real GDP will decrease a. only when production of goods and services decreases. b. only when prices decrease. c. only when production of goods and services and prices decrease. d. when prices decrease or output decreases.

a. only when production of goods and services decreases.

Which of the following is included in the investment component of GDP? a. purchases of new capital goods, but not purchases of stocks and bonds b. purchases of stocks and bonds, but not purchase of new capital goods c. purchases of stocks and bonds, and purchases of new capital goods d. neither purchases of stocks and bonds, nor purchases of new capital goods

a. purchases of new capital goods, but not purchases of stocks and bonds

John plows snow from driveways. He spends $2 on gas and charges $25 each time he plows. What's the total contribution to GDP each time John plows a driveway? a. $23 b. $25 c. $27 d. $2

b. $25

If in some year real GDP was $45 billion and the GDP deflator was 130, what was nominal GDP? a. $30.3 billion b. $58.5 billion c. $34.6 billion d. $15 billion

b. $58.5 billion

An economy recently had nominal GDP of 5 trillion euro and a GDP deflator of 125. What was real GDP? a. 4 trillion euro, but nominal GDP is a better gauge of economic activity than real GDP. b. 4 trillion euro, and real GDP is a better gauge of economic activity than nominal GDP. c. 6.25 trillion euro, and real GDP is a better gauge of economic activity than nominal GDP. d. 6.25 trillion euro, but nominal GDP is a better gauge of economic activity than real GDP.

b. 4 trillion euro, and real GDP is a better gauge of economic activity than nominal GDP.

If nominal GDP is $16 trillion and real GDP is $24 trillion, then the GDP deflator is a. 75, and this indicates that the price level has increased by 75 percent since the base year. b. 67, and this indicates that the price level has decreased by 33 percent since the base year. c. 150, and this indicates that the price level has increased by 50 percent since the base year. d. 150, and this indicates that the price level has increased by 150 percent since the base year.

b. 67, and this indicates that the price level has decreased by 33 percent since the base year.

Which of the following is the way that Net National Product is calculated? a. Saving is added to the total income of a nation's citizens. b. Depreciation losses are subtracted from the total income of a nation's citizens. c. Depreciation losses are added to the total income of a nation's citizens. d. Saving is subtracted from the total income of a nation's citizens.

b. Depreciation losses are subtracted from the total income of a nation's citizens.

GDP a. Includes the value of services provided by major household appliances purchased in a previous period but not the value of government services. b. Includes the value of government services but not the value of services provided by major household appliances purchased in a previous period. c. Excludes the value of government and services and the value of services provided by major household appliances purchased in a previous period. d. Includes both the value of services provided by major household appliances purchased in a previous period and the value of government services.

b. Includes the value of government services but not the value of services provided by major household appliances purchased in a previous period.

Tom, an American resident, crosses the border to work in Canada. Mike, a Canadian resident, crosses the border to work in the U.S. Whose production is included in U.S GDP? a. Tom's but not Mike's. b. Mike's but not Tom's. c. Neither Tom's nor Mike's. d. Both Tom's and Mike's.

b. Mike's but not Tom's.

An American company operates a coffeehouse in Lisbon, Portugal. Which of the following statements is accurate? a. The value added by American workers and equipment in Portugal is included in U.S. GDP and the value added by Portuguese workers and equipment is included in Portuguese GDP. b. The value of the goods and services produced by the coffeehouse is included in Portuguese GDP, but not in U.S. GDP. c. The value of the goods and services produced by the coffeehouse is included in U.S. GDP, but not in Portuguese GDP. d. The value of the goods and services produced by the coffeehouse is included in both Portuguese GDP and U.S. GDP.

b. The value of the goods and services produced by the coffeehouse is included in Portuguese GDP, but not in U.S. GDP.

If the prices of all goods and services produced in the economy stayed the same while the quantity of all goods and services rose, which would rise? a. real GDP but not nominal GDP. b. both real GDP and nominal GDP. c. nominal GDP but not real GDP. d. neither nominal GDP nor real GDP.

b. both real GDP and nominal GDP.

The citizens of Denmark earn $300 million of income from abroad whereas citizens of other countries earn $500 million in Denmark. Therefore, Denmark's a. net factor payments from abroad are positive, and its GNP is larger than its GDP. b. net factor payments from abroad are negative, and its GDP is larger than its GNP. c. net factor payments from abroad are negative, and its GNP is larger than its GDP. d. net factor payments from abroad are positive, and its GDP is larger than its GNP.

b. net factor payments from abroad are negative, and its GDP is larger than its GNP.

Sally drives an automobile she purchased several years ago. This year she bought gasoline and some parts and spent five hours making repairs. Which of the following is included in this year's GDP? a. only the amount she paid to buy new parts. b. the amount she paid to buy gasoline and new parts, but not the value of her time. c. the amount she paid to buy gasoline, new parts, and the value of her time making repairs. d. only the amount she paid to buy gasoline.

b. the amount she paid to buy gasoline and new parts, but not the value of her time.

A U.S. firm produced cash registers in the first quarter of 2015 and added them to its inventory. In the second quarter of 2015 the firm sold the cash registers to a U.S. grocery store chain. In which quarter(s) does (do) these transactions raise investment? a. the second but not the first b. the first but not the second c. the first and the second d. neither the first nor the second

b. the first but not the second

Real GDP is computed using a. current prices and base-year quantities. b. current prices and current quantities. c. base-year prices and current quantities. d. base-year prices and base-year quantities.

c. base-year prices and current quantities.

GDP equals: a. the quantities of all final goods and services produced by domestic residents. b. the market value of all final goods and services produced within a country in a given period of time. c. the market value of all final goods and services produced by domestic residents minus profits made by domestic firms. d. the wages paid to all domestic residents, less taxes.

b. the market value of all final goods and services produced within a country in a given period of time.

Gross domestic production is equal to. a. the total income of everyone in the economy, but not the total expenditure on the economy's output of goods and services. b. the total income of everyone in the economy, and the total expenditure on the economy's output of goods and services. c. neither the total income of everyone in the economy, nor the total expenditure on the economy's output of goods and services. d. the total expenditure on the economy's output of goods and services, but not the total income of everyone in the economy.

b. the total income of everyone in the economy, and the total expenditure on the economy's output of goods and services.

Question Content Area McDermott's builds a new restaurant and David purchases stock sold by McDermott's. a. the value of the new stock is included in GDP, but the value of the new restaurant is excluded from GDP. b. the value of the new restaurant is included in GDP, but the value of the new stock is excluded from GDP. c. the value of the new restaurant and the value of the new stock are included in GDP. d. the value of the new restaurant and the value of the new stock are excluded from GDP.

b. the value of the new restaurant is included in GDP, but the value of the new stock is excluded from GDP.

GDP is defined as the: a. value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time. b. value of all final goods and services produced by domestic residents of a country in a given period of time. c. value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time. d. value of all goods and services produced by domestic residents of a country in a given period of time.

b. value of all final goods and services produced by domestic residents of a country in a given period of time.

Tom lives in an apartment where he pays $8,000 a year in rent. Sarah lives in a house that could be rented for $10,000 a year. How much do these housing services contribute to GDP? a. $8,000 b. $10,000 c. $18,000 d. $0

c. $18,000

If an economy's income falls, then it must be the case that the economy's a. GDP and saving both fell. b. GDP fell and its saving rose. c. GDP and expenditures both fell. d. GDP fell and expenditures rose.

c. GDP and expenditures both fell.

U.S. GDP and U.S. GNP are related as follows. a. GNP = GDP + Value of exported goods - Value of imported goods. b. GDP = GNP - Income earned by foreigners in the U.S. + Income earned by U.S. citizens abroad. c. GNP = GDP - Income earned by foreigners in the U.S. + Income earned by U.S. citizens abroad. d. GDP = GNP + Value of exported goods - Value of imported goods.

c. GNP = GDP - Income earned by foreigners in the U.S. + Income earned by U.S. citizens abroad.

The U.S. computes that $3 trillion of GDP was produced in the second quarter of 2014. What, if any, adjustments will it make to this number when it reports GDP for the second quarter? a. It will only adjust for seasonality. b. It will only multiple by four. c. It will adjust for seasonality and multiple by four. d. It will make no adjustments.

c. It will adjust for seasonality and multiple by four.

George lives in a home that was newly constructed in 2011 for which he paid $200,000.In 2014 he sold the house by himself for $250,000. Which of the following statements is correct regarding the sale of the house? a. The 2014 sale increased 2014 GDP by $250,000 and had no effect on 2011 GDP. b. The 2014 sale increased 2014 GDP by $250,000; furthermore, the 2014 sale caused 2011 GDP to be revised upward by $50,000. c. The 2014 sale affected neither 2014 GDP nor 2011 GDP. d. The 2014 sale increased 2014 GDP by $200,000 and had no effect on 2011 GDP.

c. The 2014 sale affected neither 2014 GDP nor 2011 GDP.

Which of the following is included in the government purchases component of GDP? a. the federal government buys fighter jets, a local government pays its police, but not a state government repairs highways. b. the federal government buys fighter jets, a state government repairs highways, but not a local government pays its police. c. The federal government buys fighter jets, a state government repairs highways, a local government pays its police d. a state government repairs highways, a local government pays its police, but not the federal government buys fighter jets.

c. The federal government buys fighter jets, a state government repairs highways, a local government pays its police

Sally buys used textbooks for $600 and new textbooks for $800 that are made in the U.S. As a result a. U.S. consumption purchases increase by $1,400 and U.S. GDP increases by $800. b. U.S. consumption purchases increase by $800 and U.S. GDP increases by $1,400. c. U.S. consumption purchases increase by $800 and U.S. GDP increases by $800. d. U.S. consumption purchases increase by $1,400 and U.S. GDP increases by $1,400.

c. U.S. consumption purchases increase by $800 and U.S. GDP increases by $800.

A U.S. company purchases new cement mixers that were made in the U.S. This purchase by itself makes a. a positive contribution to GDP, but it does not affect investment or consumption. b. a positive contribution both to consumption and to GDP. c. a positive contribution both to investment and to GDP. d. a positive contribution to investment, but it does not affect GDP.

c. a positive contribution both to investment and to GDP.

Question Content Area Which of the following is an example of a durable good? a. a pair of socks b. gasoline c. a television d. an ice cream cone

c. a television

A U.S. grocery chain purchases cans of sardines from a cannery in Morocco and sells them to U.S. consumers. In which of the following is this transaction included? a. U.S. imports but not U.S. consumption b. U.S. consumption but not U.S. imports c. both U.S. consumption and U.S. imports d. neither U.S. consumption nor U.S. imports

c. both U.S. consumption and U.S. imports

Which of the following are examples of transfer payments? a. social security payments but not unemployment benefits b. unemployment benefits but not social security payments c. both unemployment benefits and social security payments d. neither unemployment benefits nor social security payments

c. both unemployment benefits and social security payments

GDP: a. includes most goods and services produced at home but excludes most goods and services produced illegally. b. excludes most goods and services produced at home but includes most goods and services produced illegally. c. excludes most goods and services produced at home and most goods and services produced illegally. d. includes most goods and services produced at home and most goods and services produced illegally.

c. excludes most goods and services produced at home and most goods and services produced illegally.

A farmer produces potatoes, and sells them to a company which uses them all to make potato chips. The potatoes produced by the farmer are called a. transitory goods. b. final goods. c. intermediate goods. d. inventory goods.

c. intermediate goods.

The GDP deflator equals a. real GDP divided by the inflation rate multiplied by 100. b. real GDP divided by nominal GDP multiplied by 100. c. nominal GDP divided by real GDP multiplied by 100. d. nominal GDP divided by the inflation rate multiplied by 100.

c. nominal GDP divided by real GDP multiplied by 100.

Suppose an economy produces only eggs and ham. In 2015, 100 dozen eggs are sold at $4.50 per dozen and 50 pounds of ham sold at $3 per pound. In 2014, the base year, eggs sold at $3 per dozen and ham sold at $4 per pound. For 2015 a. nominal GDP is $500, real GDP is $600, and the GDP deflator is 83.3 b. nominal GDP is $500, real GDP is $600, and the GDP deflator is 120 c. nominal GDP is $600, real GDP is $500, and the GDP deflator is 120 d. nominal GDP is $600, real GDP is $500, and the GDP deflator is 83.3

c. nominal GDP is $600, real GDP is $500, and the GDP deflator is 120

The value of items produced and purchased in the past such as previously occupied housing and used clothing is a. included in current GDP but valued at their original prices. b. not included in current GDP because it is difficult to measure such transactions. c. not included in current GDP because GDP only measures the value of final goods and services produced in the current year. d. included in current GDP because GDP measures the value of all goods and services sold in the current year.

c. not included in current GDP because GDP only measures the value of final goods and services produced in the current year.

In a simple circular-flow diagram, a. money flows from firms to households in the markets for goods and services. b. money flows from households to firms in the factor markets. c. the money that flows from households to firms equals expenditure. d. profits remain at firms and are not paid out to households.

c. the money that flows from households to firms equals expenditure.

In a simple circular-flow diagram, households buy goods and services with the income they get from a. wages and rent. b. wages. c. wages, rent, and profits. d. wages and profit.

c. wages, rent, and profits.

Suppose you make two purchases for yourself. Which of them is included in GDP? a. A new textbook, but not a haircut. b. A haircut, but not a new textbook. c. Neither a haircut nor a new textbook. d. Both a new textbook and a haircut.

d. Both a new textbook and a haircut.

The residents of Ecuador earn $700 million of income from abroad. Residents of other countries earn $200 million in Ecuador. The earnings of Ecuadorian residents abroad are accounted for in Ecuador's a. GNP which is smaller than its GDP. b. GDP which is larger than its GNP. c. GDP which is smaller than its GNP. d. GNP which is larger than its GDP.

d. GNP which is larger than its GDP.

John restores cars as a hobby. He buys a 1964 Mustang, new parts and paint, and spends personal time restoring it. He then sells the car. Which of the following is included in GDP? a. Only the value of John's time. b. The value of the new parts and paint, the value of John's time and his purchase of the old car. c. The value of the new parts and paint, the value of John's time, but not his purchase of the old car. d. Only the value of the new parts and paint.

d. Only the value of the new parts and paint.

If a U.S. company buys brewing equipment made in Germany by a German firm, the other things the same a. U.S. imports increase and so U.S. net exports increase. b. U.S. exports increase and so U.S. net exports decrease. c. U.S. exports increase and so U.S net exports increase. d. U.S. imports increase and so U.S. net exports decrease.

d. U.S. imports increase and so U.S. net exports decrease.

If you buy pizza at your favorite local pizzeria, a. GDP will be unchanged, but consumption spending will be higher. b. GDP will be higher, but consumption spending will be unchanged. c. neither GDP nor consumption is changed, because pizza is not a durable good. d. both GDP and consumption spending will be higher.

d. both GDP and consumption spending will be higher.

A U.S. hospital provides surgical services and a U.S. pharmacy sells prescription drugs. a. only the surgical services are included in GDP. b. only the prescription drugs are included in GDP. c. both the surgical services and the prescription drugs are excluded from GDP. d. both the surgical services and prescription drugs are included in GDP.

d. both the surgical services and prescription drugs are included in GDP.

Question Content Area When nominal GDP rises, we can be certain that a. quantities of goods and services produced must have risen. b. prices must have risen. c. both prices and quantities of goods and services must have risen. d. either prices or quantities of goods and services must have risen.

d. either prices or quantities of goods and services must have risen.

Which of the following items is included in U.S. GDP? a. the difference in the price of the sale of an existing home and its original purchase price b. all known illegal activities c. both intermediate and final goods d. goods produced by Mexican citizens working in the United States

d. goods produced by Mexican citizens working in the United States

Which of the following is not included in the consumption component of GDP? a. household purchases of food sold in the U.S. but purchased abroad. b. household purchases of medical care. c. household purchases of appliances. d. household purchases of newly constructed homes.

d. household purchases of newly constructed homes.

If nominal GDP is three times its old value and the GDP deflator is twice its old value, then real GDP a. is 5 times its original value. b. is 6 times its original value. c. is 2.5 times its original value. d. is 1.5 times its original value.

d. is 1.5 times its original value.

Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP primarily makes use of a. quantities produced. b. market prices minus the costs of production. c. an estimate of the costs of production. d. market prices.

d. market prices.

Transfer payments from the government to households are a. not for the current production of goods and services. They are included in GDP b. for the current production of current goods and services. They are not included in GDP. c. for the current production of goods and services. They are included in GDP. d. not for the current production of goods and services. They are not included in GDP.

d. not for the current production of goods and services. They are not included in GDP.

Which of the following items purchased by households are included in investment rather than consumption? a. only the purchase of stocks and bonds b. spending on education and the purchases of new housing c. spending on education and the purchases of stocks and bonds d. only the purchases of new houses

d. only the purchases of new houses

During recessions what happens to profits and the unemployment rate? a. both fall. b. both rise. c. profits rise and the unemployment rate falls. d. the unemployment rate rises and profits fall.

d. the unemployment rate rises and profits fall.