What would happen to measured GDP if more people started hiring workers to do household chores such as cooking and cleaning?
What will be an ideal response?
GDP is the value of the final goods and services that are produced in an economy over a specified time period. However, GDP, as measured, does not include the value of household production people do for themselves around their homes. Therefore if you wash your car at your home or apartment, the value of the car washing is not included in GDP. However if you hired someone to wash your car at your home or apartment, the value of the car washing would be included in GDP. Thus if more people started hiring workers to do household chores, measured GDP would increase.
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The money supply would tend to fall if:
a. banks decide to keep more excess reserves and people convert more of their demand deposits to currency. b. banks decide to keep more excess reserves and people deposit currency in their demand deposit accounts. c. banks decide to keep fewer excess reserves and people deposit currency in their demand deposit accounts. d. banks decide to keep fewer excess reserves and people convert more of their demand deposits to currency.
Which method of corporate finance is used the most? Why?
What will be an ideal response?