GDP tends to underestimate the productive activity in the economy because it excludes the value of output from:
A. Public transfer payments to households
B. The consumption of fixed capital
C. The underground economy
D. Intermediate goods
C. The underground economy
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When the interest rate is so low that the opportunity cost of holding money is zero, then economists say we have reached:
A) the era of total liquidity. B) the zero lower bound situation, which means the U.S. economy may be in a liquidity trap. C) full monetary saturation. D) a situation in which a nation must use caution, since monetary policy is "super" effective.
In the short-run macro model, an increase in the money supply will
a. move the economy to the right along the aggregate expenditure line. b. move the economy to the left along the aggregate expenditure line. c. shift the aggregate expenditure line upward. d. shift the aggregate expenditure line downward. e. cause the aggregate expenditure line to rotate until it is flat.