Question 1

Suppose that investment in the United States was about $130 billion and the trade deficit was $10 billion. How much was national saving in the United States? If the government budget surplus was $2 billion, how much total saving by consumers and businesses in the United States occurred?

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Question 2

Suppose that the following data explain the economic activity in a country in the year 2010. $$\begin{array} { | c | c | } 
\hline \text { Component of Spending } & \begin{array} { c } 
\text { Value in billions } \
\text { of dollars }
\end{array} \
\hline \text { Consumption } & 174 \
\hline \text { Business fixed and residential investment } & 40 \
\hline \text { Inventory stock at the end of } 1999 & 10 \
\hline \text { Inventory stock at the end of } 2000 & 15 \
\hline \text { Depreciation } & 18 \
\hline \text { Govemment outlays } & 90 \
\hline \text { Government purchases } & 75 \
\hline \text { Total government tax receipts } & 100 \
\hline \text { Exports } & 21 \
\hline \text { Imports } & 30 \
\hline \text { Labor income } & 150 \
\hline \text { Capital Income } & 90 \
\hline \text { Net income of foreigners } & 10 \
\hline \text { Sales taxes } & 30 \
\hline
\end{array}$$ Given these data, calculate the following:
 (A) Inventary investinent
(B) Net erants
(C) Gross domestic product
(D) Statistical discrepancy
(E) Netionel secㅏㅁㅏ
(F) Gaverment serin
(G) Verify that national saring equuals investment plus net exgorts

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The answer of Suppose that the following data explain the...

Question 3

Consider the following two scenarios for monthly inventories and sales for a company producing cereal. In both scenarios, the company's sales are the same.   In scenario A, the company maintains production at a constant level. In scenario B, the company adjusts production from month to month to try to match sales.
 (A) Calculate the inventary investment in eachmonth and resulting stock af inventary at the bepirning of the fallowing manth far both scenarias.
(B) Haw does mantaining canstant production affect the stack of inventary? Esgalain.

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Question 4

Can real GDP per capita serve, by itself, as an adequate measure of individual well-being?

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Question 5

Answer the questions below:
 (A) If a parent has to talse the afternoan aff fram wark to pick up his ar her chicren fram school and transport them to a frend's house, what happens to GDP?
(B) If the parent hires a nanny to pick the children upand transpart then to a friend's house, what will happen to GDP?
(C) Are yaur answers to (A) and (B) the same? Eoglain.

Accepted Answer

The answer of Answer the questions below:
 (A) If a...

Question 6

Please answer true or false and explain.
 (A) A new technology is fliccuered that results in all new cars prachcing 50 percent less pollution. Peaple are better aff because the air they breathe is cleaner, and hence GDP wrill increase to reflect the fact that people are better off.
(B) A new technology is hiscavered that results in all new cars protucing 50 percent less pollution. As a result there is areduction in the number of visits peaple make to the doctar to complain of breathing difficulties. Peaple are better aff because they are healthier, and hence GDp wril increase to reflect the fact that people are better aff.
(C) A new technolay is liscavered that results in all new cars producing 5D percent less pallution. The ederal gaverment affers all peaple awring cars built befare $1980 \mathrm { a }$ 1,000 rebate on the purchase of anew car in an attempt to remove polluting cars from the raad. One thausand peaple accept the affer and buy new cars warth 25 millian. GDP increases by the value of the cars sold, which is $\$ 25$ millian, and the tatal amount of the govermment exgenditure on the rebate propram, which is $\$ 1$ million.

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The answer of Please answer true or false and explain.
...

Question 7

Suppose that, in response to a new government policy, some businesses are forced to go underground.
 (A) How will this affect the measure of GDP?
(B) Will this change in GDP reflect a change in well-beine?

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The answer of Suppose that, in response to a new...

Question 8

Examine the following data for a hypothetical centrally planned economy that subsequently freezes prices so that they are not allowed to change: $$\begin{array} { | c | c | c | c | } 
\hline \text { Good } & \text { Quantity } & \begin{array} { c } 
\text { Controlled } \
\text { Price }
\end{array} & \text { Market Price } \
\hline \begin{array} { c } 
\text { Higher } \
\text { Education }
\end{array} & 200 & \$ 1,000 & \$ 3,000 \
\hline \text { Cereal } & 10,000 & \$ 5 & \$ 1 \
\hline
\end{array}$$ (A) Assume that hepher education and cereal are the anly godes and services produced in this economy. Calculate GDP under the cantrdled prices and under market prices, a5suring the quuantities do not change. Did government-5et prices result in an under- ar đvervaluation af praduction an the whole?
(B) How do people value each good in relation to previously cantralled prices?

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The answer of Examine the following data for a hypothetical...

Question 9

Use the following data for an ice-cream vendor at a local fair: $$\begin{array} { | l | r | } 
\hline \text { Reverue: } & \$ 1,800 \
\hline \text { Costs: } & \
\hline \text { Wages and salaries } & \$ 350 \
\hline \text { Concession stand fee } & \$ 300 \
\hline \text { Rental fee for truck } & \$ 100 \
\hline \text { Ice cream } & \$ 850 \
\hline
\end{array}$$ (A) Calculate the vencar's value anded.
(B) Profits are revenue minus costs. Cepital income cansists of prafits, rents, and interest. Show that the value added equuls capital income plus labor income paid by the vendar.
(C) Suppose that at a similar fair, the temperature is codler and revenues fall to 1,500 , but the prices of intermepliate inputs, rental fees, and wages and saleries ta not change. What happens to value added and profits in this case?

Accepted Answer

The answer of Use the following data for an ice-cream...

Question 10

Given the information in the table below for three consecutive years in the U.S. economy, calculate the missing data.
 $\begin{array}{|c|c|c|c|c|c|c}
\hline \text { Year } & \begin{array}{c}
\text { Nominal } \
\text { GDP } \
\text { (billions } \
\text { of } \
\text { dollars) }
\end{array} & \begin{array}{c}
\text { Real } \
\text { GDP } \
\text { (billions } \
\text { of 2009 } \
\text { dollars) }
\end{array} & \begin{array}{c}
\text { GDP } \
\text { Deflator } \
\text { (2009=100) }
\end{array} & \begin{array}{c}
\text { Inflation } \
\text { (percent } \
\text { change in } \
\text { GDP } \
\text { deflator) }
\end{array} & \begin{array}{c}
\text { Ropulation } \
\text { (millions) }
\end{array} & \begin{array}{c}
\text { GDP per } \
\text { Capita } \
\text { (2009 } \
\text { dollars) }
\end{array} \
\hline 2014 & 17,393.1 & - & 108.8 & 1.8 & - & 50,170 \
\hline 2015 & & 16,397.2 & & 1.1 & & 51,098 \
\hline 2016 & - & - & 111.4 & - & 323,128 & 51.565 \
\hline
\end{array}$

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The answer of Given the information in the table below...

Question 11

Determine whether each of the following would be included in GDP, and explain why or why not.
 (A) Yau buy aused car from a frend.
(B) Yau buy a used car at the local dealership.
(C) Yau are an at-home parent and spend you day cleaning house, codking menls, ant caring for the childen.
(D) Yau hire anany to clean yau house, cook your meals, and care far your children.

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The answer of Determine whether each of the following would...

Question 12

List three points that need to be kept in mind when reading news stories about GDP.

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The answer of List three points that need to be...

Question 13

Suppose there are only three goods in an economy:
 $\begin{array}{|c|l|c|c|}
\hline \text { Year } & \text { Item } & \text { Price } & \text { Quantity } \
\hline 2016 & \text { Tomatoes } & \$ 3 / 1 \mathrm{~b} . & 1,000 \mathrm{lbs} . \
\hline & \text { Squash } & \$ 1 / 1 \mathrm{~b} . & 600 \mathrm{lbs} . \
\hline & \text { Smartphones } & \$ 100 & 20 \
\hline & & & \
\hline 2017 & \text { Tomatoes } & \$ 4.50 / \mathrm{b} . & 900 \mathrm{lbs} . \
\hline & \text { Squash } & \$ 21 / \mathrm{b} . & 700 \mathrm{lbs} . \
\hline & \text { Smartphones } & \$ 125 & 30 \
\hline
\end{array}$
 (A) Calculate nominal GDP for 2016 and 2017 .
(B) Calculate the percentege change in GDP fram 2016 to 2017 using 2016 prices and 2017 prices.
(C) Calculate the percentage change in real GDp fram 2016 to 2017 using yau answer fram (B).
(D) What is the GDP deflatar far 2017 if it is equal to 1.D in 2016 ?

Accepted Answer

The answer of Suppose there are only three goods in...

Question 14

Determine in which spending category, if any, each of the following transactions would be recorded.
 (A) Fard 5 ells a Thunterbird fran its inventary.
(B) Ford sells a Thunderbird that it produced this year to the state government.
(C) The city of Dallas purchases camputer paper for its emplayees fram a local firm.
(D) A business in Dallas purchases camputer paper for its emplayees fram alocal firm.
(E) Yau Jranduther mins 10 millian in the lottery.
(F) Yau purchase a newly constructed house.

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The answer of Determine in which spending category, if any,...

Question 15

Why are revisions of GDP inevitable? Why does it matter?

Accepted Answer

The answer of Why are revisions of GDP inevitable? Why...

Quiz 6: Measuring the Production, Income, and Spending of Nations

Suppose that investment in the United States was about $130 billion and the trade deficit was $10 billion. How much was national saving in the United States? If the government budget surplus was $2 billion, how much total saving by consumers and businesses in the United States occurred?

Can real GDP per capita serve, by itself, as an adequate measure of individual well-being?

Suppose that, in response to a new government policy, some businesses are forced to go underground. (A) How will this affect the measure of GDP? (B) Will this change in GDP reflect a change in well-beine?

List three points that need to be kept in mind when reading news stories about GDP.

Why are revisions of GDP inevitable? Why does it matter?