Question

An economy is considered to be in an expansion if:

A. Real GDP has increased for two consecutive quarters

B. It is moving from the trough to the peak of the business cycle

C. It is moving from the peak toward the trough of the business cycle

GDP include

A. Intermediate and final goods to count all goods and services produced

B. Final goods and inventories of imported intermediate goods

C. Only final goods to avoid double counting when including intermediate goods

Investment in human capital

A. Is of minor importance to economic growth

B. Cannot be acquired through on-the-job-training.

C. Is an important source of labor productivity.

Answer 1

Ans) 1) Expansion is the phase where real GDP grows for two or more consecutive quarters while moving from trough to peak.

Option a.

2) GDP is the value of final goods or service produced in an economy. To avoid double calculation i.e counting value of good more than once, intermediate goods are not counted.

Option c.

3) Human capital is the development of skills of humans. It can be increased through education, training etc. It helps to increase labour productivity. As a result, it leads to economic growth.

Option c.