6. Aggregate expenditure and income Suppose the following table shows consumption (C), investment (I), government purchases (G), and net exports (NX) in a hypothetical economy for various levels of real GDP. Assume that the price level remains unchanged at all levels of real GDP. Real GDP с G NX (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) 500 250 250 200 -150 600 325 250 200 -150 700 400 250 200 -150 800 475 250 200 -150 900 550 250 200 -150 The following graph shows real GDP on the horizontal axis and aggregate expenditure on the vertical axis. Use the orange line (square symbol) to plot a 45-degree line on this graph. Then use the blue points (circle symbols) to plot the aggregate expenditure line for this economy. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.

6. Aggregate expenditure and income Suppose the following table shows consumption (C), investment (I), government purchases (G), and net exports (NX) in a hypothetical economy for various levels of real GDP. Assume that the price level remains unchanged at all levels of real GDP. Real GDP с G NX (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) 500 250 250 200 -150 600 325 250 200 -150 700 400 250 200 -150 800 475 250 200 -150 900 550 250 200 -150 The following graph shows real GDP on the horizontal axis and aggregate expenditure on the vertical axis. Use the orange line (square symbol) to plot a 45-degree line on this graph. Then use the blue points (circle symbols) to plot the aggregate expenditure line for this economy. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

6. Aggregate expenditure and income
Suppose the following table shows consumption (C), investment (I), government purchases (G), and net exports (NX) in a hypothetical economy for
various levels of real GDP. Assume that the price level remains unchanged at all levels of real GDP.
Real GDP
с
G
NX
(Billions of dollars) (Billions of dollars) (Billions of dollars)
(Billions of dollars) (Billions of dollars)
500
250
250
200
-150
600
325
250
200
-150
700
400
250
200
-150
800
475
250
200
-150
900
550
250
200
-150
The following graph shows real GDP on the horizontal axis and aggregate expenditure on the vertical axis.
Use the orange line (square symbol) to plot a 45-degree line on this graph. Then use the blue points (circle symbols) to plot the aggregate
expenditure line for this economy.
Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.
AGGREGATE EXPENDITURES (Billions of dollars)
1000
900
800
700
600
500
400
400
500
600
700
800
900
1000
REAL GDP (Billions of dollars)
45-Degree Line
AE Line
+
Equilibrium Output
(?)
On the previous graph, use the black point (plus symbol) to indicate the equilibrium output at this price level.
Note: Dashed drop lines will automatically extend to both axes.
Suppose real GDP is currently $500 billion. Assuming that the price level remains constant, this would mean that
, which would send a signal to firms to

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4. GDP and Related Measures Suppose an economy produces only 2 products that will also be used for direct consumption, as per the article at the end of the exam: chicken wings and donuts. In the second quarter of 2021 (the base period), 180,000 pounds of chicken wings were produced, at a value of $3.50 per pound, while in the second quarter of 2022, production of chicken wings increased to 200,000 pounds, at a value of $3.75 per pound. In the second quarter of 2021 (the base period), 85,000 donuts were produced at a value of $0.85 per donut, while in the second quarter of 2022, donut production increased to 100,000 donuts, each at a value of $0.95 per donut. The population in this economy is 1000 individuals in 2022, while the number of hours worked in 2022 is 5000. Also, the quantities that were produced in 2021 represent the quantities that were purchased by the typical household, meaning that everything that was produced was sold. a. Solve for real GDP in the second quarter of 2021.…
2. Activities included (and not included) in the calculation ofGDP The gross domestic product (GDP) of the United States is defined as the all in a given period of time. Based on this definition, indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in 2020. 2020 GDP Scenario Included Excluded Sofaland, a Swedish furniture company, produces a table at a plant in Virginia on December 5, 2020. It sells the table to a college student on December 24. You chop down a cherry tree on your property in California and make a dining room table in 2020. A similar table sells for $800 in a local furniture store. Zippycar, a U.S. automobile company, produces a convertible at a manufacturing plant in Minneapolis on January 21, 2020. It sells the car at a dealership in San Francisco on February 10, 2020. Athleticus, a U.S. shoe company, produces a pair of sneakers at a plant in Vietnam on March 10, 2020. Athleticus imports the pair…
None
Refer to the Table. Assume that this economy produces only two goods Good X and Good Y. The value for this economy's nominal GDP in year 3 is Year 1 Good X 60 Good Y 100 OA) $204. OB) $222. OC) $250. OD) $270. Production Year 2 80 110 Year 3 100 130 Year 1 $1.00 $0.80 Prices Year 2 $1.00 $0.90 Year 3 $1.40 $1.00
29.The income approach to measuring GDP: A) B) c) focuses on how income is earned, not spent. uses the factors payments made by households to businesses to estimate GDP. uses household expenditures to back out national income and GDP. D) uses of the factor payments made by household to government 30. National income is a sum of: a) spending of four sectors of the economy on GDP. b) payments to the factors of production. c) factors payments made by household to government d) factors payments made by business to government.
Suppose you have the following information about household expenditure:Year Nominal ($m) Real ($m)2013 145 1302014 150 128Which of the following must be true? Select one: a. Both the price and quantity of goods and services in household expenditure have increased. b. Both the price and quantity of goods and services in household expenditure have decreased. c. The price of goods and services in household expenditure has increased and the quantity has decreased. d. The price of goods and services in household expenditure has decreased and the quantity has increased.
1. What is the distinction between Nominal GDP and Real GDP? Which is more important in terms of satisfying humans wants? Why? 2. Use list to compute GDP from the Expenditures approach. Personal Consumption expenditures $600 Transfer payments $15 Consumption of fixed capital $20 Interest $11 Exports $15 Government purchases $85 Compensation of employees $225 Imports $18 Net private domestic investment $65
H10.
5. Limitations of GDP Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all transactions and production for that nation. Which of the following scenarios are either not accounted for or measured inaccurately by either the income or the expenditure methods of calculating GDP for the United States? Check all that apply. The value of babysitting services, when the babysitter is paid in cash and the transaction isn't reported to the government The costs of air and water pollution Federal government paychecks to soldiers The variety of goods available to consumers When a U.S. company purchases and imports wood from Brazil to use to build new houses within the United States, this purchase increases the component of GDP while also net exports by the same amount. Therefore, the purchase of wood from Brazil causes in US GDP.
6. Limitations of GDP Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all transactions and production for that nation. Which of the following scenarios are either not accounted for or measured inaccurately by either the income or the expenditure methods of calculating GDP for the United States? Check all that apply. The costs of overfishing and other overly intensive uses of resources O Federal government paychecks to soldiers The value of babysitting services, when the babysitter is paid in cash and the transaction isn't reported to the government The leisure time enjoyed by households When a U.S. company purchases and imports wood from Brazil to use to build new houses within the United States, this purchase increases the component of GDP while also net exports by the same amount. Therefore, the purchase of wood in US GDP. from Brazil causes