Question

1. Which of the following would be included as investment in the GDP accounts?

a.

the government buys goods from another country

b.

someone buys stock in an American company

c.

a firm increases its capital stock

d.

All of the above are correct.

2. Scenario 26-3. Assume the following information for an imaginary, open economy.

Consumption = $1,000; investment = $200; net exports = -$50;
taxes = $230; private saving = $225; and national saving = $150.

Refer to Scenario 26-3. For this economy, GDP equals

	a.	$1,505.
	b.	$1,480.
	c.	$1,455.
	d.	$1,460

3. Which of the following is correct?

a.

Lenders sell bonds and borrowers buy them.

b.

Long-term bonds usually pay a lower interest rate than do short-term bonds because long-term bonds are riskier.

c.

The term junk bonds refers to bonds that have been resold many times.

d.

None of the above is correct.

4. You have been promised a payment of $100,000 in the future. In which case is the present value of this future payment highest?

	a.	You receive the payment 2 years from now and the interest rate is 6 percent.
	b.	You receive the payment 2 years from now and the interest rate is 4 percent.
	c.	You receive the payment 3 years from now and the interest rate is 4 percent.
	d.	You receive the payment 3 years from now and the interest rate is 6 percent.

Answer 1

Answer 1

c.

a firm increases its capital stock Other options mentioned in the question are not considered as investment in the GDP account Answer 2 c. $1455 Okay so this is (likely) consumption, investment, and private saving combined. I'm assuming exports don't count as they are not being consumed by the people in that economy, taxes don't count since they are not a good or service, and the same sentiment goes for national saving. Answer 3 d. None of the above is correct. Long terms bond usually have high interest rates than short term bonds . Option A and c have been given the wrong definitions so option D is the correct answer Answer 4 B. You receive the payment 2 years from now and the interest rate is 4 percent. Rest of the options have lower present values