Question
GDP and its components Evaluate each one of the following statements by True/False/Uncertain. Justify your answer in a few lines. Remember that: Y = C
GDP and its components
Evaluate each one of the following statements by True/False/Uncertain. Justify your answer in a few lines. Remember that:
Y = C + I + G + XM.
1. Trade deficits (XM < 0) are evidently bad for the economy because they decrease GDP.
2. By construction, nominal GDP must always be greater or equal than real GDP.
3. Since cars are durable goods, buying a used car increases GDP because durable goods are measured in the household consumption component of GDP.
4. If a firm sells a product from its inventory, that transaction does not affect GDP.
5. Gross National Product (GNP) cannot be greater than GDP.
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