18 Questions
What is the primary distinction between government purchases and transfer payments?
Government purchases are spending on goods and services, while transfer payments are support provided to individuals.
Which of the following would be considered investment spending?
A business buying a new piece of equipment.
What is the term for goods produced but not yet sold?
Inventory accumulations.
Which of the following is NOT a type of investment?
Buying a new bond.
What is the term for spending on goods and services purchased by the government?
Government purchases.
Which of the following would be considered a type of residential capital?
A landlord's apartment building.
What is the effect on Net Exports (NX) when Nylah spends $1,200 on a new smartphone built in China?
NX falls by $1,200
What happens to GDP when Joseph spends $800 on a tablet to use in his editing business?
GDP remains unchanged
When GM builds $500 million worth of cars, but consumers only buy $470 million of them, what happens to Inventory Accumulations (I) and GDP?
I rises by $30 million, GDP rises by $500 million
What is the effect on Investment Spending (I) when Jahzara spends $300 to buy her husband dinner at the finest restaurant in Boston?
I remains unchanged
What happens to Gross Domestic Product (GDP) when Nylah spends $1,200 on a new smartphone built in China?
GDP remains unchanged
What is the effect on Government Purchases (G) when Jahzara spends $300 to buy her husband dinner at the finest restaurant in Boston?
G remains unchanged
What type of purchases are excluded from the consumption component of GDP?
Purchases of new housing
Which of the following is NOT a component of investment in GDP?
Spending on government purchases
What is the term for the value of goods and services produced domestically and sold abroad minus the value of goods and services produced abroad and sold domestically?
Net exports
What is the purpose of using constant base-year prices in real GDP?
To eliminate the effect of inflation
Which of the following is a limitation of using GDP as a measure of economic well-being?
It excludes the value of leisure and the value of a clean environment
What is the term for the ratio of nominal GDP to real GDP?
GDP deflator
Learn about the different types of investments in economics, including business capital, residential capital, and inventory accumulations. Understand the concept of investment and its importance in the economy.
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