Question

What a good political environment can do to the growth? a. Set up barriers of international trade to protect the domestic industry. b. Increase uncertainty to increase the potential wellbeing of the economy. c. Encourage people to be economically productive. d. Monitor and take control of individual properties to serve for economic growth.

Assuming there is no foreign trade in the economy, the inventories will increase when a) Y = I + G b)Y < I + G c)Y > I + G d) None of above

How much GDP would the following transaction generate for the United States? If no GDP will be counted as US GDP, fill $0. Assume all material and product are made in U.S unless stated otherwise. a)Christina bought $10 grocery and cooked dinner at home. If she went to the restaurant for the same dinner, it will cost $20.

Answer 1

1)Encourage people to be economically productive

The other options do not promote economic activities. Setting up trade barriers to protect the domestic industry reduces competition and quality of the goods do not improve. Increasing uncertainity induces problems as it increases currency speculation and interest rates fluctuate due to uncertain inflation which deters investment. The control of individuals reduces their freedom as well as their efficiency.

2) Inventories will increase when Y< I+G

When planned aggregate demand exceeds actual output, the need for increasing inventories arises.

3)$10 will be included in GDP calculation which was paid for grocery. No amount will be added for production at home as it does not increase income of any person.