Question

social security payments to the retired are counted in which part of total spending (C + I + G +nX) ?

A) counted in Investment

B) counted in government purchases

C) counted in consumption

D) not counted in total spending

in the luxury goods market, if household incomes fall

A) price falls and quantity rises for luxury goods

B) price and quantity of luxury goods rise

C) price and quantity of luxury goods fall

D) price rises and quantity falls for luxury goods

if net exports are negative

A) net factor income from foreign countries is negative

B) exports are greater than imports

C) we have a trade surplus

D) we have a trade deficit

Answer 1

Option D is correct. Social security payments are not counted in total spending because they are not bilateral payments. there is no service rendered against such payment and due to this reason they are not a part of GDP

Option C is correct. people will demand very limited luxuries when they have less income. This implies that when income falls the demand for luxuries decreases and the price and quantity both will decline

Option D is correct. the trade is in surplus when net exports are positive and the trade is in deficit with net exports are negative