Define transfer payments and explain why they are not included in the government purchases section of the GDP accounts
What will be an ideal response?
Transfer payments are funds paid to individuals that are not associated with the production of goods and services. They are not included in the government purchases section of the GDP accounts because nothing is being produced in return for the payment. However they do show up in the accounts indirectly when they are spent (and saved) by their recipients; thus they do appear in the consumption (and saving) section of the accounts.
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The following data show Uruguay's GDP using purchasing power parity in billions of dollars
Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 GDP($) 26.1 25.8 23.3 24.3 27.9 30.1 33.9 37.2 40.2 Using the data, we can conclude that A) Uruguay's economy reached a peak in 2000. B) GDP per person in Uruguay almost doubled between 2000 and 2008. C) potential GDP in Uruguay doubled between 2000 and 2008. D) Uruguay's economy was entered a recession in 2008.
In the long run, in monopolistic competition
A) a firm's price equals its marginal cost. B) firms make an economic profit. C) firms make zero economic profit. D) Both answers A and C are correct.