Assume a small nation has the following statistics: its consumption expenditure is $15 million, investment is $2 million, government expenditure on goods and services is $1 million, exports of goods and services to foreigners is $1 million, and
imports of goods and services from foreigners is $1.5 million. Calculate this nation's GDP.
The nation's GDP equals the sum of consumption expenditure, investment, government expenditure on goods and services, and net exports of goods and services, where net exports of goods and services equals of goods and services exports minus imports of goods and services. So, GDP = $15 million + $2 million + $1 million + $1 million - $1.5 million = $17.5 million.
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If an economist were to consult for a major Fortune 500 company, and he reached the conclusion the firm was making zero economic profit,
A) the firm's accounting profit would be greater than zero. B) the firm should go out of business immediately. C) the firm's accounting profits would be lower. D) the economist's numbers were probably wrong because economic profit can never be zero.
Refer to Figure 13-1. Ceteris paribus, a decrease in households' expectations of their future income would be represented by a movement from
A) AD1 to AD2. B) AD2 to AD1. C) point A to point B. D) point B to point A.