1, Gross Domestic Product is equivalent to the sum of consumer spending, investm
ID: 1163796 • Letter: 1
Question
1, Gross Domestic Product is equivalent to the sum of consumer spending, investment spending on capital goods, government purchases, exports, and imports. consumer spending, investment spending, government purchases and exports. consumer spending, capital inventory, government purchases and exports. consumer spending, capital inventory, government purchases, and net exports. consumer spending, investment spending, government purchases, and net exports. 2. Which of the following is consistent with advocates of rational expectations? If consumers fully anticipate an increase in interest rates, then real GDP will decrease by the value of the multiplier. real GDP will not change. price level will increase. unemployment will increase. 3.The government might finance deficit spending by borrowing money from the International Monetary Fund. issuing bonds. raising interest rates. increasing the reserve requirement. borrowing money from the World Bank. 1, Gross Domestic Product is equivalent to the sum of consumer spending, investment spending on capital goods, government purchases, exports, and imports. consumer spending, investment spending, government purchases and exports. consumer spending, capital inventory, government purchases and exports. consumer spending, capital inventory, government purchases, and net exports. consumer spending, investment spending, government purchases, and net exports.Explanation / Answer
ANSWER :1. Gross Domestic Product is equivalent to the sum of consumer spending, investment spending, government purchases, and net exports. Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. The calculation of the GDP: GDP = C + I + G + (X – M) or GDP = private consumption + gross investment + government investment + government spending + (exports – imports). Nominal value changes due to shifts in quantity and price.
2 ) Price level will increase if consumer fully anticipated an increase interest rate .
3 ) The government might finance deficit spending by issuing bond . Budget deficit meanse government expenditure is greater than government revenue in a particular financial year . Under fiscal deficit or borrowing the government issues bonds and sells it in the market. Generally, sale of interest-bearing bonds to the public is indirect through financial intermediaries such as banks. Banks buy the bonds floated by the government with the currency deposits of the public. Therefore, debt-financing of budget deficit is also known as bond-finance of budget deficit.
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