Deck 23: Essay

Question 1

Which component of GDP includes spending on new structures and equipment?

Answer 1

$14.5 trillion

Question 2

What are transfer payments,and how do they affect the calculation of GDP?

Answer 2

capital equipment,inventories,and structures which includes residential construction

Question 3

List the four components of GDP.

Answer 3

GDP = C + I + G + NX = $5.5 trillion + $1 trillion + $1.5 trillion + $.75 trillion - $1.25 trillion = $7.5 trillion

Question 4

Define GDP.Remember to be specific about what it includes.

Question 5

Figure 23-2.
Refer to Figure 23-2.Identify the location for markets for factors of production and markets for goods and services.

Question 6

Consumption is $7 trillion,investment is $1.5 trillion,government expenditures are $2 trillion,government transfer payments are $1 trillion,exports are $1.50 trillion and imports are $1.25 trillion.What is GDP?

Question 7

In the circular flow diagram what are the three types of payments from firms to factors of production? Is the sum of these payments greater than,less than,or equal to GDP?

Question 8

GDP excludes most of two types of production.List one.

Question 9

What are exports,and how are they different from imports?

Question 10

Alexandria,a British citizen,owns and manages a fish and chips shop in Washington,D.C.
She buys fresh food produced by U.S.workers,pays utilities to a U.S.company,and employs only U.S.citizens.What part,if any,of the restaurant's production is included in U.S.GDP? What part,if any,of the restaurant's production is included in U.S.GNP?

Question 11

Identify the largest and smallest components of GDP.

Question 12

For the economy as a whole,how does income compare to expenditures? Explain.

Question 13

Figure 23-2.
Refer to Figure 23-2.Identify the location of firms and households.

Question 14

A farmer sells sugar to a candy producer for $150.If the producer uses this sugar to make candy that sells for $200,what is the total contribution to GDP from these transactions?

Question 15

Explain how GNP differs from GDP.

Question 16

Figure 23-2.
Define gross domestic product.

Question 17

Are sales of used goods included in GDP? Explain why or why not.Hint: Remember how GDP is defined.

Question 18

Figure 23-2.
Refer to Figure 23-2.List the locations associated with the flow of inputs and outputs.

Question 19

Consumption is $5.5 trillion,investment is $1 trillion,government expenditures are $1.5 trillion,transfer payments are $.5 trillion,exports are $.75 trillion and imports are $1.25 trillion.What is GDP?

Question 20

How frequently is U.S.GDP reported? Is GDP adjusted for seasonality?

Question 21

Foreign countries buy $1.2 trillion of U.S.goods and services.U.S.residents purchase $1.8 trillion of foreign goods and services.What is net exports?

Question 22

Calculate the inflation rate for a country where the GDP deflator rises from 120 to 165.

Question 23

What measure of GDP shows the value of goods and services produced if we valued these good and services at the prices that prevailed in some specific year in the past?

Question 24

Last quarter Newton computers produced 3,000 computers.Two thousand of these computers were sold to households,750 were sold to businesses,and 250 were added to Newton's inventory.How many of the computers should have been included in last quarter's GDP?

Question 25

Calculate GDP for an economy with exports of $5 trillion,investment of $1.5 trillion,consumption spending of $11 trillion,imports of $6 trillion,and government purchases of $3 trillion.

Question 26

Nominal GDP is $12 trillion and real GDP is $15 trillion.What is the GDP deflator? Show your work.

Question 27

Explain the pattern seen between GDP per person and quality of life measures such as life expectancy,literacy,and Internet usage.

Question 28

In 2011 a country had a real GDP of $13.89 trillion and GDP deflator of 110.In 2012 it had a nominal GDP of $17.8 trillion and real GDP of 14.24 trillion.What is the rate of inflation in 2012?

Question 29

Java Hut,a U.S.coffee retailer,buys $10 million worth of coffee beans from Colombia.It also pays $5 million for paper cups and utilities,all produced in the U.S.It sells the coffee it produces using the above inputs to U.S.consumers for $50 million.Overall how do these expenditure affect net exports? How do these expenditures effect U.S.consumption?

Question 30

The U.S.buys $500 billion of goods and $250 billion of services from foreign countries.Foreign countries buy $250 billion of goods and $300 billion of services from the U.S.What is net exports?

Question 31

Nominal GDP is $15 trillion and real GDP is $10 trillion.What is the GDP deflator? Show your work.

Question 32

Calculate GDP for a country with investment of $2 trillion,government purchases of $3 trillion,capital depreciation of $1.5 trillion,consumption of $10 trillion,exports of $3.4 trillion,and imports of $3.9 trillion.

Question 33

Write the formula for calculating a GDP deflator using only nominal and real GDP.

Question 34

Explain how real GDP differs from nominal GDP.

Question 35

In 2010 a country had nominal GDP of 6 trillion euro and real GDP of 5 trillion euro.In 2011 it had nominal GDP of 6.5 trillion euro and real GDP of 5.2 trillion euro.What was its inflation rate in 2011? Show your work.

Question 36

What three types of goods are included in investment spending?

Question 37

In 2012 a country had a real GDP $15.4 trillion and GDP deflator of 125.If that country's GDP deflator equals 115 in 2013,what is the rate of inflation in 2013?

Question 38

Identify which of the following are included in the government purchases component of GDP.
the salary paid to a state court judge
unemployment insurance benefits
the payment made by the federal government for a jet fighter
social security payments
a county builds a jail building

Question 39

A U.S.-owned automobile factory uses $50 million worth of materials produced in the U.S.and $10 million worth of material purchased from foreign countries to produce $100 million of automobiles.$70 million worth of these automobiles are purchased by U.S.consumers,$25 million are sold in foreign countries,and $5 million are added to inventory.How much of this production is included in U.S.GDP? By how much do these transactions alone affect U.S.net exports?

Question 40

Write the formula for calculating a country's inflation rate using the GDP deflator.

Question 41

You find that your paycheck for the year is higher this year than last.Does that mean that your real income has increased? Explain carefully.

Question 42

Explain why it is the case that the value of intermediate goods produced and sold during the year is not included directly as part of GDP,but the value of intermediate goods produced and not sold is included directly as part of GDP.

Question 43

GDP is defined as the market value of all final goods and services produced within a country in a given period of time.In spite of this definition,some production is left out of GDP.Explain why some final goods and services are not included.

Question 44

U.S.real GDP is substantially higher today than it was 60 years ago.What does this tell us,and what does it not tell us,about the well-being of U.S.residents?