Which of the following represents an income flow in the circular flow of domestic output and national income?

A price level increase tends to reduce net exports, thereby reducing the amount of real goods and services purchased in the United States. Economists refer to this phenomenon as

A) the barrier effect. B) the Gross Domestic Product (GDP) effect. C) the open-economy effect. D) the wealth effect.

The currently used method for calculating the CPI

A) accounts for people increasing consumption of a good that falls in relative price. B) probably overstates inflation by about 1 percentage point. C) has no effect on government expenditures. D) None of the above answers are correct.