A Drawback of Using Market Values to Aggregate the Quantities

question 209

Multiple Choice

A drawback of using market values to aggregate the quantities of goods and services produced in an economy is that:

• A)higher-priced items count more.
• B)GDP increases when not all goods are produced in greater quantities.
• C)market prices generally reflect the economic benefit consumers expect to receive from an item.
• D)not all economically valuable goods and services are bought and sold in markets.

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Definitions:

Time Value of Money

The idea that having money in the present is more valuable than having the same sum in the future because of its ability to generate earnings.

Salvage Value

The projected remaining worth of an asset when it reaches the end of its operational lifespan.

Annual Rate of Return

The percentage of return on an investment over a one-year period, including interest, dividends, and capital gains.

Net Income

A company's total profit calculated by subtracting total expenses from total revenue.