Aden Tabers_Assignment No. 3 GDP-1

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Coastal Alabama Community College - Bay Minette *

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Economics

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Feb 20, 2024

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Aden Tabers ECO 231 Principles of Macroeconomics Coastal Alabama Community College Assignment No.3 Gross Domestic Product Instructions: 1. Questions in Section I: When answering these questions, students should explain, in detail, their answers. If not, they will receive only partial credit. 2. Question in Section II: When answering these questions, students must show all calculations. If not, they will receive only partial credit. Section I: Which of the following transactions would count in GDP? Explain each option (A-F), in detail: A. Becky buys a new sweater to wear this winter. Becky buying a new sweater would count in GDP. This is because buying the sweater represents a part of a household’s consumption expenditure. Becky’s purchase contributes to the economy’s output and is a part of consumer spending which would be included in GDP. B. Katelyn receives a Social Security check. Katelyn receiving a Social Security check would not count in GDP. This is because the check is a transfer payment from the government to an individual and does not represent any contribution or economic activity in the nation’s output. C. Adrien gives his daughter $50 for her birthday. Adrien giving his daughter $50 would not count in GDP. This would not count in GDP because this scenario also involves a transfer-type payment and does not involve any purchasing of a good or service that contributes to production. D. Carolyn sells $1,000 of Google stock. This transaction does not count in GDP. The purchasing and selling of stocks do not count because buying and selling stock represents the transfer of ownership of an existing asset and does not have anything to do with economic activity within production. E. Arya buys a new car. Arya buying a new car would indeed count in GDP. This is because her buying a new car represents a consumption expenditure on a durable good and adds to the economy’s output. F. Destiny buys a used car. Destiny buying a used car would not count in GDP. Buying a used car involves a transaction between two individuals and does not have anything to do with production of new goods or services within the current period so therefore does not count in GDP. Section II. Using the following national income accounting data, compute (a) GDP, (b) NDP, and (c) NI. All figures are in billions. Show all calculations, not just the final number.

A. GDP calculation: 219.1+ 59.4 + 11.8+ 52.1 + (17.8 – 16.5) = $343.7 Billion B. NPD calculation: 343.7 – 11.8 = $331.9 Billion C. NI calculation: 331.9 + 2.2 = $334.1 Billion

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