Gross domestic product (GDP) can be calculated using either the expenditure method or the income method.
Answer the following statement true (T) or false (F)
True
This reflects the national income accounting identity: production equals income.
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If the average interval between firms' price adjustments is relatively long
A) an increase in aggregate demand will cause a relatively short-lived increase in real GDP. B) an increase in aggregate demand will cause a relatively long-lived increase in real GDP. C) a reduction in aggregate demand will cause a relatively short-lived reduction in real GDP. D) none of the above.
Which of the following "externalities" does not distort the allocation of resources? I. An individual's unwillingness to cut his or her own lawn in an otherwise immaculately kept neighborhood. II. Smoke produced by a new firm in an area that raises the costs of other firms. III. A new firm's bidding up skilled wages in an area, thus raising costs of other firms. IV. An individual's unwillingness
to obtain job training, thereby lowering the total GNP. a. I, III, and IV. b. III and IV. c. III only. d. IV only.