How do you adjust Gross National Product to obtain Net National Product ?
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Answer: C. Deduct subsidies
Explanation
Net National Product is calculated by deducting depreciation (capital consumption allowance) from Gross National Product.
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Q1. What kind of information do time series data present ?
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Answer: B. about different points in time over the same variable
Time series data track observations of the same variable across different points in time. Option B correctly describes the longitudinal nature of time series datasets. Economists use these data points to analyze historic...
Q2. How is GDP adjusted from market prices to factor cost ?
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Answer: B. Subtract subsidies
Adjusting gross domestic product from market prices to factor costs involves subtracting net indirect taxes or subsidies. Market prices include indirect taxes levied by governments which do not reflect payments to factor...
Q3. What steps are required to determine the correct level of GNP ?
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Answer: A. To add up the values of goods and services for one year
Gross National Product is calculated by summing the total value of all final goods and services. Option A correctly identifies this core national income accounting methodology. It measures the total economic output produ...
Q4. At what point must a firm produce to achieve allocative efficiency ?
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Answer: C. The price equals the average cost
Allocative efficiency requires price to equal marginal cost, though option C is marked in the dataset key.
Q5. What did the prevailing 1960s view of the Phillips curve imply about policies that ?
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Answer: B. lower unemployment rate will tend to raise the inflation rate
The traditional Phillips curve observed a negative relationship where lower unemployment rates correlate with higher inflation. Policy makers in the nineteen sixties believed they could choose any combination along this...
Q6. At what maximum output level should a firm produce to maximize growth without incurring a loss ?
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Answer: C. Marginal revenue equals marginal cost
Profit maximization and standard economic equilibrium occur where marginal revenue equals marginal cost. Option C correctly identifies this foundational rule for optimal firm production levels. Producing beyond this poin...