Question

Residential investment includes spending by firms on office buildings. Select one: O True O False The GDP deflator is a measure of the Select one: O a. average level of prices of intermediate goods and services in the economy. O b. average level of prices of final goods and services in the economy. O c. total production of the economy unadjusted for inflation. O d.) total production of the economy adjusted for inflation.

Answer 1

1):- it is false

Residential investment includes spending by firms on office buildings.

Residential Investment is refers the spending on the building of new homes and the renovations of existing ones

BUT if someone buy an existing home the spending on it does not count as part of residential investment because there is no production or construction occurred

Residential Investment is HIGHLY volatile in nature

2) :- B is right option

The GDP deflator is a measure of the average level of prices of final goods and services in the economy

GDP deflator formula

Nominal GDP divided by real GDP times one hundred

3) :- D is right option

to examine how the total production of an economy has changed over time it would be better to examine real GDP

Real GDP is defined as GDP prices fixed to a base year and used to make year to year

5):-c is right option

Full employment is not considered to be zero unemployment, because people do not find jobs instantaneously

zero unemployment is defined as the unemployment rate will not be zero because of frictional and structural unemployment

6) :-B is right option

Suppose the labor force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed. The labor force participation rate will

remain constant

labour force is defined as all those people who have jobs

7) :-c is right option

The size of the underground economy would tend to increase if the government of a country increased income tax rates.