True/False

1. Imports are leakages from the circular flow of income and expenditure model.

2. An increase in the production of capital goods and a reduction in the production of consumer goods would most likely lead to a faster rate of future economic growth.

3. Gross domestic product ( GDP) is a good measure of social welfare since it includes the value of leisure time.

4. A nation's aggregate expenditure decreases with an increase in imports, other things constant.

5. If the ratio of labor to capital increases, we can expect that labor productivity will increase.

6. The fallacy of composition is the error of believing that a cause and effect relationship exists between two events that are associated in time.

7. Inventories help manufacturers cope with unexpected changes in the supply of their resources or in the demand for their products.

8. The consumer price index (CPI) overstates the true inflation rate because it ignores changes in consumers' purchasing patterns as relative prices change.

9. Economics studies how decision makers use scarce resources to satisfy unlimited wants.

10. An increase in wage rate, other things constant, shifts the aggregate supply curve downward