Question

QUESTION 24 Which component is the smallest part of U.S. GDP? A. personal consumption expenditures. B. gross private domestic investment. C. government purchases of goods and services. D.net exports. QUESTION 25 If the GDP is 17,500 in 2014, investment is $3,000, government purchases total $3,000, Exports are $2300 and Imports are 2,800, then Consumption should equal: A. $11,600 B. $12,000 C. $15,000 D.$14,000 QUESTION 26 If the producers of cotton shirts face higher cotton prices, which of the following is likely to occur? A. The supply of cotton shirts decreases, the equilibrium price of cotton shirts rises, and the equilibrium quantity falls. B. The supply of cotton shirts decreases, the equilibrium price of cotton shirts rises, and the equilibrium quantity rises. C. The supply of cotton shirts increases, the equilibrium price of cotton shirts rises, and the equilibrium quantity falls. D. The supply of cotton shirts increases, the equilibrium price of cotton shirts falls, and the equilibrium quantity rises. QUESTION 27 The idea that all income ultimately goes to households, which then use it to buy goods and services from firms, is a central idea of the A. production possibilities frontier. B. supply and demand model. C.circular flow diagram. D.classical model. QUESTION 28 Macroeconomics was developed to explain: A. the Great Depression. B.jobless recoveries. C.the Industrial Revolution. D. the Internet boom.

Answer 1

24. Net export is the smallest part of the US GDP and personal consumption expenditure is the largest part of the US GDP.

Answer: Option (D).

25. Y = C + I + G + X - IM

17500 = C + 3000 + 3000 + 2300 - 2800

17500 = C + 5500

C = 17500 - 5500

C = 12000

Answer: Option (B)

26. A rise in the price of cotton will increase the production cost of the cotton shirts. As a result the production of the cotton shirts falls and supply decreases.

Therefore, supply curve of the cotton shirts left which results in a increase in equilibrium price and decrease in equilibrium quantity.

Answer: Option (A)

27. The idea that all income ultimately goes to households, which then use it to buy goods and services from firms is the central idea of the circular flow diagram.

Answer: Option (C)

28. Macroeconomic was developed to explain the Great Depression

Answer: Option (A)