How does the presence of negative externalities affect the calculation of GDP?
What will be an ideal response?
Negative externalities arise when one person's action makes somebody else worse off. Externalities are also omitted from the calculation of GDP. Sometimes negative externalities even get counted as positive contributors to economic output. For example, property crimes, like theft, lead people to purchase locks and other security devices. In some cases, property owners hire guards to safeguard their possessions. All of this preventive activity counts as a positive contributor to GDP.
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The probability of an event is the:
A) time taken for the event to occur. B) frequency at which the event occurs. C) net benefit to society from the event. D) total number of economic agents affected by the event.
A budget surplus
A) occurs when government expenditures exceed tax revenues. B) occurs when tax revenues exceed government expenditures. C) occurs when tax revenues exceed transfer payments. D) occurs when monetary policy works in the opposite direction of fiscal policy. E) is an impossibility.