1. Which of the following statistics is usually regarded as the best single meas
ID: 1151781 • Letter: 1
Question
1. Which of the following statistics is usually regarded as the best single measure of a society's economic well-being? a. the unemployment rate b. the inflation rate c. gross domestic product d. the trade deficit 2. For an actual economy, total expenditures on goods and services by households does not equal GDP because a. household spending exceeds their incomes b. household expenditures on goods and services falls short of GDP, since household save for the future c. household expenditures include only goods, since services are intangible and cannot be measured accurately d. household expenditures on goods and services are made using borrowed funds. 3. A steel company sells some steel to a bicycle company for S150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute a. $150 to GDP b. $250 to GDP c. between $250 and $400 to GDP, depending on the profit earned by the bicycle company when it sold the bicycle. d. $400 to GDP 4. Which of the following correctly lists what is included in the consumption component of GDP? a. household purchases of services and household purchases of nondurable goods but not any household purchases of durable goods b. household purchases of nondurable goods and durable goods other than residential construction but not household purchases of services c. household purchases of services, nondurable goods, and all durable goods d. household purchases of services, nondurable goods, and durable goods other than residential constructionExplanation / Answer
(1) (c)
Real GDP (growth rate) is considered the best measure of economic well-being.
(2) (b)
Savings is a leakage from the circular flow, which makes house expenditure and GDP unequal.
(3) (b)
GDP includes only the final value of goods and services sold, which is $250 in this case (final value of the bicycle which consumers pay to the seller).
(4) (d)
Residential construction falls under Gross domestic private investment category of GDP.
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