Question

T or F

36. GDP= C + I + G + NX; I REPRESENTS CORPORATE INVESTMENTS AND CONSUMERS BUYING

HOUSES FOR THEIR FIRST TIME.

37. PUBLIC TRANSFER PAYMENTS INCLUDES SOCIAL SECURITY, UNEMPLOYMENT

COMPENSATION, AND AUNT TINA GIVING HER FAVORITE NEPHEW $ 250,000.

38. NOMINAL GDP= GDP - INFLATION.

39. DISCRETIONARY INCOME= DISPOSAL INCOME + (EXPENSES – 0) x 1.0.

40. STAGFLATION IS THE WORST OF ATIONS AFTER HYPERINFLATION.

41. MUTUAL FUNDS ARE A POOL OF MANY INVESTMENTS AND GIVES DIVERSIFICATION. THEY

ARE NOT SAFE.

42. THE UNEMPLOYED INCLUDES EVERYONE WITHOUT A JOB AND ARE LOOKING FOR A JOB

DURING THE LAST 4 WEEKS.

Answer 1

36. False, I includes Business fixed investment, inventory investment, residential construction investment and public investment.

37. False, all are included in public transfer except Aunt Tina giving her nephew 250,000 as this is not a public transfer payment as public transfer payment include unemployment compensations, social security, medical benefits.

38 False, nominal gdp is the measure of GDP value of all goods and services at the current market prices. Nominal GDP by definition reflects inflation.

39 False, expenses should be subtracted from disposable income to get discretionary income.

40. True, stagfaltion is the situation when the inflation is high but the output growth slows and unemployment rate remains steadily high. Stagflation is costly both in social cost and in budget deficits.

41.False by diversification the risk is reduced as the invesments are made in various financial instruments. It aims to maximize the return from each investment. So, mutual funds are diversification of funds and therefore are safer.

42. True because the person is willing to work but unable to find the job is also included in the unemployment case.