Which of the following is a shortcoming of GDP?
a. GDP excludes changes in inventories.
b. GDP includes an estimate of illegal transactions.
c. GDP excludes nonmarket transactions.
d. GDP excludes business investment spending.
Question 2
Which of the following is true, other things equal?
a. A reduction in prices will increase the real wealth of those holding a fixed quantity of money.
b. A reduction in prices will lead to a decline in net exports.
c. A reduction in prices will increase the scarcity of money, raise the real interest rate, and, thereby, encourage investment and consumption.
d. A reduction in prices will increase profit margins and, thereby, stimulate additional investment.
