Which of the Following Events Will Reduce GDP

question 152

Multiple Choice

Which of the following events will reduce GDP?

• A) A hurricane destroys your house.
• B) You lose $500 playing poker.
• C) You pay $500 to repair the damage done to your house by a hurricane.
• D) You work 15 hours less this month so that you can repair the damage done to your home by a hurricane.

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Definitions:

Price Level

The general level of prices for goods and services in an economy, often measured by a price index.

Federal Reserve

The central banking system of the United States, which conducts the nation's monetary policy, regulates banks, maintains the stability of the financial system, and provides financial services to depository institutions, the U.S. government, and foreign official institutions.

Monetary Policy

Economic policy tools used by a central bank to control the supply of money, aiming to achieve macroeconomic objectives like controlling inflation, consumption, growth, and liquidity.

Interest-Rate Targets

The specific interest rates that central banks aim for in their monetary policy operations to influence economic conditions.