Kelly's Surf Shop orders 5,000 new surf boards at the beginning of the year but only sells 4,500 by the end of the year. How are the 500 unsold surfboards accounted for in Gross Domestic Product?
A) They will be included in the nondurable consumption category of GDP.
B) They will be included in the residential investment category of GDP.
C) They will be included in the government spending category of GDP.
D) They will be included in the inventory investment category of GDP.
E) They will be included in the durable consumption category of GDP.
D
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The best measure of the standard of living is generally considered to be
A) labor productivity. B) the average duration of a typical business cycle. C) the labor force participation rate. D) real GDP per capita.
Equilibrium GDP on the demand side occurs when total spending
a. equals total production, and inventories are zero. b. equals total production, and firms are unable to adjust inventories. c. exceeds total production, and inventories are rising. d. equals total production, and inventories remain at desired levels. e. is less than total production, and inventories are falling.