11. When calculating GDP from the expenditure side, actual consumption expenditures include

A) the purchase of a new house.

B) American tourists purchasing goods and services in Canada.

C) increases in automobile inventories.

D) the construction of an apartment building.

E) the monthly rental of an apartment.

12. The table below shows total output for an economy in 2020 and 2021, with a base year of 2015.

Year	Nominal GDP	GDP Deflator	Real GDP
2020	$860,000	106	$
2021	$890,000		$825,000

2020 real GDP equals ________ and the 2021 GDP deflator equals ________.

A) $811,321; 108

B) $911,600; 103

C) $860,000; 94

D) $911,600; 92

E) $811,321; 94

8. Consider the case of a natural monopoly with falling long-run average costs. If regulation were to set the price equal to marginal cost, then

A) the firm would earn negative economic profits.

B) the firm would earn zero economic profits.

C) the demand curve would shift to the left.

D) the firm would earn positive economic profits.

E) the outcome would be inefficient.

5. Suppose that when a firm hires one additional unit of labour, total product increases from 100 to 110 units of output per month. Marginal product must therefore be

A) increasing.

B) positive.

C) decreasing.

D) constant.

E) zero.

6. Suppose there are many independent hair salons in your city, each of which is earning positive economic profits. According to the theory of monopolistic competition,

A) existing hair salons will cooperate and maximize their joint profits.

B) existing hair salons will engage in non-price competition and maintain their profits in the long run.

C) existing hair salons will expand until they reach the quantity associated with minimum average cost.

D) existing hair salons will cooperate and restrict entry of new firms.

E) new hair salons will enter this market until each firm is earning zero economic

profits.