Question

questions 6-8

QUESTION 6 In the circular flow model, profits are considered to be © a form of interest payment. a subtraction from the Gross Domestic Product (GDP). e a cost of doing business. equal to zero, or else the circular flow would be out of balance. QUESTION 7 The annual cost of producing the entire output of goods and services in the economy O includes durable goods but excludes nondurable goods. can be calculated entirely on the basis of financial transactions. o includes financial transactions. is total income. QUESTIONS Using the expenditure approach to deriving gross domestic product, if U.S. imports rise and exports remain the same GDP falls. GDP indicates a recession. GDP remains the same. GDP rises

Answer 1

6) it should be considered as a form of interest payment. this is because wages interest profits dividend all are considered as a flow from firms to households. Select the first option

7) last option is correct. Total expenditure is equal to total income because GDP is calculated from both the methods

8) first option is correct. Because there is an increase in imports and no change in export, net exports will fall and this will decrease GDP