Consider two items that might be included in GDP: (1) the estimated rental value of owner-occupied housing and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
a. Both item (1) and item (2) are included in the consumption component of GDP.
b. Item (1) is included in the consumption component of GDP, while item (2) is included in the investment component of GDP.
c. Item (1) is included in the investment component of GDP, while item (2) is included in the consumption component of GDP.
d. Only item (2) is included in GDP, and it is included in the investment component.
b
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If the cross elasticity of demand between car insurance and new cars is -0.41, then car insurance and new cars are
A) complements. B) substitutes. C) normal goods. D) inferior goods. E) unrelated goods.
Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03. This means that
A) beer and wine are substitutes and wine is a luxury good. B) beer and wine are substitutes and wine is an inferior good. C) beer and wine are complements and wine is a luxury good. D) beer and wine are complements and wine is an inferior good.