5 If an economys GDP rises then it must be the case that the

[5] If an economy\'s GDP rises, then it must be the case that the economy\'s ( a. income rises and saving falls. b. income and saving both rise. c. income and expenditure both rise. d. income rises and expenditure falls. [6] In calculating the CPI, a fixed basket of goods and services is used. The quantities of the goods and services in the fixed basket are determined by a. surveying consumers. b. surveying sellers of the goods and services. c. working backward from the rate of inflation to arrive at imputed values for those quantities. d. arbitrary choices made by federal government employees. 17) The quantity of goods and services produced from each unit of labor input is called() a. standard of living b. productivity

Solution

[5]. As the GDP rises then it must be the case that income and expenditure both rise. So, c is the correct option.

It is so because income and expenditure are the two sides of same coin. One person\'s income is another person\"s expenditure in the economy. So if income is rising (as GDP rises) it is another way of saying that expenditure rises. As far as savings and income are related savings might increase or decrease but that depends on consumption function used.

[6]. Surveying consumers.

CPI measures Consumer price inflation. It recods the change in price level of alll consumer goods and services. For USA, it includes more than 200 categories in eight major groups: Food and Beverages, Housing, Apparel, Transportation, Medical Care, Recreation, Education and Communication, and Other Goods And Services. Consumption data from sample household is collected and different weights are attached to each item as per the proption of income spent on the commodity.

[7]. Productivity

To be exact, quantity of good and services produced from each unit is called marginal productivity. It is measure of productivity of inputs. the higher it is the better it is.

[8]. The knowledge and skill that workers acquire through education, training and experience.