Question Details

Because pollution is a byproduct of many production processes



. If the typical market basket of goods and services cost $400 in 1995, and the price index (base year 1992) for 1995 is 120, then if this same typical bundle cost $420 in 1996, the price index in 1996 would be 
a) 120 or below b) between 120 and 125 c) 125 d) above 125 
2. "The economists who set up GDP also established a number of rather arbitrary conventions to distinguish between investment and consumption components of GDP. Generally, goods and services purchased by households are treated as consumption expenditures, but ________ purchases are a major exception to this rule and are included in the investment category of GDP." The blank is best filled with new 
a) automobile b) housing c) clothing d) government bond 
3. "Because pollution is a byproduct of many production processes, GDP accountants should adjust GDP _______ but do not, causing GDP to ________ economic welfare. The blanks are best filled with 
a) upwards; overstate b) upwards; understate 
c) downwards; overstate d) downwards; understate




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