According to the fundamental identity of national income accounting, income and output are identical. Why, then, is national income not equal to GDP?
What will be an ideal response?
National income is net of depreciation, while GDP is a gross measure. National income is earned by residents of the economy, while GDP measures the economic activity that occurs on national territory. Thus, income earned by residents as a result of economic activity abroad is included in national income, but not in GDP. Income arising from domestic production that is paid to foreigners, rather than residents, is included in GDP, but not in national income.
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The "minimum efficient scale" of operation in an industry is defined as:
A) the smallest plant size that can be operated by firms in the industry. B) the scale of operation at which economies of scale are exhausted. C) the smallest number of firms that could effectively meet demand for an industry's output. D) the scale of operation by firms in an industry that is least efficient.
When the price of an inferior good increases,
a. both the income and substitution effects encourage the consumer to purchase more of the good. b. both the income and substitution effects encourage the consumer to purchase less of the good. c. the income effect encourages the consumer to purchase more of the good, and the substitution effect encourages the consumer to purchase less of the good. d. the income effect encourages the consumer to purchase less of the good, and the substitution effect encourages the consumer to purchase more of the good.