Please answer these with true and false answer, but use your explanations. Use diagrams if necessary....

Please answer these with true and false answer, but use your explanations. Use diagrams if necessary.

1. Ian buys 100 shares of a hot cannabis stock for $1 each on the stock market and pays a brokerage commission of $9.99. The transaction adds $109.99 to GDP.

2. If the result of cannabis legalization in Canada is that the value added from the illegal transactions moves to a legal market, then GDP will increase and so will economic well-being.

3. Imagine that a country produces only two final goods: Cannabis (Cs) and Munchies (Ms). In Year 1 it produced 10 Cs at a price of $5 each and 50 Ms at a price of $1 each. In Year 2 it produced 15 Cs at a price of $6 and 50 Ms at a price of $2. If Year 1 is the base year, the inflation rate in the GDP deflator between Years 1 and 2 is 52%.

4. When aggregate consumption is $100 (billion) while disposable income is only $80 (billion), the marginal propensity to save from disposable income must be negative.

Expert Solution

Rahul Sunny answered 1 year ago

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