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
Explanation
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 produced by a country citizens over one year. Final goods are counted to avoid double-counting intermediate production stages in the economy. GNP includes output produced by domestically owned factors of production both at home and abroad. National statistical agencies compile these figures using production, income, and expenditure data.
GNP figures provide a comprehensive overview of a nation overall economic scale and health. Governments and international lenders use these metrics to assess national wealth and taxation capacity. Comparing GNP over time reveals long-term economic development and productivity improvements. Option B focuses solely on savings rather than total production of goods and services. Option C counts only imports, ignoring domestic production and export contributions entirely. Option D includes semi-finished goods, which would introduce severe double counting errors.
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Answer: C. have a low price elasticity of supply
Export cartels succeed when the underlying commodity has low price elasticity of supply. Option C correctly identifies the supply characteristic that empowers cartels to control prices. Low supply elasticity means produc...
Q2. What output level should this monopolist produce ?
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Answer: C. 3
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Q3. 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...
Q4. How do you adjust Gross National Product to obtain Net National Product ?
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Answer: C. Deduct subsidies
Net National Product is calculated by deducting depreciation (capital consumption allowance) from Gross National Product.
Q5. If the Japanese government subsidizes radios shipped to Mexico by $15 to help firms penetrate the market, what is the outcome of this trade policy ?
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Answer: B. The price of radios in Mexico equals $30 and its imports equal 30 radios
Export subsidies lower effective international prices and expand export volumes into markets. Option B correctly matches the resulting price and import volume under the subsidy policy. Financial support from governments...
Q6. 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.