Assignment Instructions/ Description
U.S. economy ended 2015 with slow growth
GDP increased at an annual rate of 0.7 percent in the final quarter of 2015. Government expenditure grew at the same 0.7 percent rate, but consumption expenditure grew at a rate of 2.2 percent. Investment and net exports shrank.
Source: BEA News Release, January 29, 2016
Use the figure to indicte the flows in which the items in the news clip occur.
How can GDP increase by 0.7 percent if consumption expenditure increased at a 2.2 percentrate?
In the figure, _______.
A.
Z is net exports and R is government expenditure on goods and services
B.
W is government expenditure on goods and servcies and V is consumption expenditure
C.
V is consumption expenditure and Z is net exports
D.
J is investment and V+W is consumption expenditure
E.
U is government expenditure on goods and services and J is investment
It is possible for GDP to increase by only 0.7 percent when consumption expenditure grew at a 2.2 percent rate because _______.
A.
intermediate goods are included in the measurement of GDP
B
total expenditure does not equal total income
C.
there is a measurement error
D.
the sum of investment and net exports shrank
E.
the sum of investment and net exports increased by less than 2.2 percent
Question is complete.
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