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True/FalseIndicatewhetherthestatementistrueorfalse.1.Thecircularflowdiagramdescribesalltransactionsbetweenhouseholdsandfirmsinasimpleeconomyandshowstheequalityofexpendituresandincome.ANSWER:TPOINTS:0/12.Grossdomesticproductincludesmostitemsproducedandsoldillicitly.ANSWER:FPOINTS:0/13.Netnationalproductisthetotalincomeofanation’sresidentsminuslossesfromdepreciation.ANSWER:TPOINTS:0/14.Disposablepersonalincomeistheincomethathouseholdsandunincorporatedbusinesshaveleftaftersatisfyingalltheirobligationstothegovernment.Itequalspersonalincomeminuspersonaltaxesandcertainnon-taxpaymentstogovernment.ANSWER:TPOINTS:0/15.ThepurchaseofnewhousesbyhouseholdsisincludedinthecalculationofpersonalconsumptionexpendituresofGDP.ANSWER:FPOINTS:0/1MultipleChoiceIdentifythechoicethatbestcompletesthestatementoranswersthequestion.1.WhenGDPfalls,a.incomeandexpendituremustbothfall.b.incomeandexpenditurecanbothrise.c.incomemustfall,butexpendituremayriseorfall.d.expendituremustfall,butincomemayriseorfall.ANSWER:APOINTS:0/12.Incomeequalsexpenditurebecausea.firmsalwayspayoutalltheirrevenueasincometosomeone.b.eachtimeasaleismade,thereisabuyerandaseller.c.householdsownthefactorsofproductionusedtogenerateincomes.d.Alloftheabovearecorrect.ANSWER:BPOINTS:0/13.Ifaprovincemakestheproductionandsaleofillicitdrugslegal,thenGDPa.mustincrease.b.mustdecrease.c.wouldn'tchange.d.mayincreaseordecrease.ANSWER:APOINTS:0/14.Whenagovernmentprovidessubsidiestoencouragegrowthofsmallbusinesses,thesubsidieswoulda.beincludedinGDPbecausetheyareinvestedbybusinesses.b.beincludedinGDPbecausetheyareaformofgovernmentspending.c.notbeincludedinGDPbecausetheyaretransferpayments.d.mayormaynotbeincludedinGDP,dependingonhowthefundsareused.ANSWER:CPOINTS:0/15.Dieselfuelisa.alwaysconsideredafinalgood.b.countedasanintermediategoodifacompanyusesittoprovidetransportationservices.c.countedasafinalgoodifafarmerusesittorunatractortogrowcrops.d.Bothbandcarecorrect.ANSWER:BPOINTS:0/16.Grossdomesticproducta.isthemarketvalueofallfina
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