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9. The purchase of final goods and services by households is called a. investment

b. public sector expenditure

c. consumption

d. net exports

ANSWER: C

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10. Investment is the purchase of capital equipment, inventories, and

a. structures

b. non-durable goods

c. depreciation

d. import investment

ANSWER: A

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11. Transfer payments

a. are included in GDP because they are forms of income

b. are included in GDP because goods and services have been produced in the transfer

c. are NOT included in the GDP because goods and services have not been produced in the transfer

d. are included in GDP because they represent the production of transfers of goods and services to foreign countries

ANSWER: C

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12. Which of the following would be considered consumption expenditure?

a. The Smiths buy a home built in 1990.

b. The federal government pays the salary of a captain in the Armed Forces.

c. The Hostlers buy a new car that was manufactured in Germany.

d. The government buys food for its armed forces.

ANSWER: C

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