Related to the Economics in Practice on P

question 204

Multiple Choice

Related to the Economics in Practice on p. 427: If a Swiss dealer sells a newly produced Swiss watch on eBay to a U.S. customer, the value of the watch is

• A) counted in U.S. GDP.
• B) counted in U.S. GDP and Swiss GDP.
• C) counted in Swiss GDP.
• D) not counted in either U.S. or Swiss GDP.

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Definitions:

Standard Deviation

In finance, standard deviation measures the amount of variance or dispersion of a set of financial returns, indicating the investment's volatility.

Expansionary Fiscal Policy

An increase in government purchases, decrease in net taxes, or some combination of the two aimed at increasing aggregate demand enough to reduce unemployment and return the economy to its potential output; fiscal policy used to close a recessionary gap

Contractionary Fiscal Policy

A decrease in government purchases, increase in net taxes, or some combination of the two aimed at reducing aggregate demand enough to return the economy to potential output without worsening inflation; fiscal policy used to close an expansionary gap.

Contractionary Monetary Policy

A monetary policy strategy used by central banks to reduce inflation and cool an overheating economy by raising interest rates and decreasing the money supply.