1) GDP understates the value of output produced by an economy because it
A. includes transactions that do not take place in organized markets, such as home cooked meals
B. includes environmental degradation caused by increased output production
C. excludes value added from the underground economy, such as tips taken under the table
D. excludes the value of the wages and benefits of government employee
2) Other things equal, a decrease in the real interest rate will
A. shift the investment demand curve to the right
B. shift the investment demand curve to the left
C. move the economy upward along its existing investment demand curve
D. move the economy downward along its existing investment demand curve
3) Other things equal, a decrease in corporate income taxes will
A. decrease the market price of real capital goods
B. have no effect on the location of the investment demand curve
C. shift the investment demand curve to the right
D. shift the investment demand curve to the left
4) Inflation in U.S. prices will cause
A. an increase in the demand for U.S. dollars and an appreciation in the exchange rate
B. an increase in the supply of U.S. dollars and a depreciation in the exchange rate
C. a decrease in the demand for U.S. dollars and a depreciation in the exchange rate
D. a decrease in the supply of U.S. dollars and an appreciation in the exchange rate