ECO202HBF13MT1Key

Theequilibriumquantitydecreasesbuttheequilibriumpricei

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: rexpendituresare$3,500billion, governmentpurchasesare$900billion,andgrossprivatedomesticinvestmentis$400 billion.Netexportsare$200billion.(False,itshouldbe ­$200billion)  29. WhentheU.S.CorporationpurchasedearthmovingequipmentfromChina,U.S.investment  increased,Chinesenetexportsincreased,andbothU.S.GDPandChineseGDPincreased.False The purchase of foreign equipment is counted as investment, but GDP measures only the value of production within the geographic borders of the United States. In order to avoid including the value of the imported equipment, imports are subtracted from GDP. Hence, the value of the equipment in investment is canceled by subtracting its value as an import.  30. Suppose the price index was 100 in 2004, 115 in 2005, and the inflation rate was lower between 2005 and 2006 than it was between 2004 and 2005. This means that the price index in 2006 could be greater than 115, but lower than 130. (True)...
View Full Document

This document was uploaded on 03/13/2014 for the course ECO 221 at Miami University.

Ask a homework question - tutors are online