assify each of the following items as a final good or an intermediate good, and identify whether it is a component of consumption expenditure, investment, or government expenditure on goods and services: m 1. Packing boxes bought by Amazon.com. em 2. Starbuck's grande mocha frappuccino bought by a student. em 3. A new limousine for the president. em 4. New airplanes bought by United Airlines. tem 1 is and item 2 is O A. an intermediate good; a final good that is consumption expenditure O B. a final good that is consumption expenditure; a final good that is consumption expenditure OC. a final good that is consumption expenditure; a final good that is investment O D. an intermediate good; a final good that is investment Item 3 is and item 4 is O A. an intermediate good; an intermediate good O B. a final good that is government expenditure; a final good that is investment O C. an intermediate good; a final good that is investment O D. a final good that is govemment expenditure; an intermediate good

assify each of the following items as a final good or an intermediate good, and identify whether it is a component of consumption expenditure, investment, or government expenditure on goods and services: m 1. Packing boxes bought by Amazon.com. em 2. Starbuck's grande mocha frappuccino bought by a student. em 3. A new limousine for the president. em 4. New airplanes bought by United Airlines. tem 1 is and item 2 is O A. an intermediate good; a final good that is consumption expenditure O B. a final good that is consumption expenditure; a final good that is consumption expenditure OC. a final good that is consumption expenditure; a final good that is investment O D. an intermediate good; a final good that is investment Item 3 is and item 4 is O A. an intermediate good; an intermediate good O B. a final good that is government expenditure; a final good that is investment O C. an intermediate good; a final good that is investment O D. a final good that is govemment expenditure; an intermediate good

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In the GDP equation, business spending is referred to as: O Consumption Investment O Government O Net Exports
18. If consumers in the U.S. buy $3.5 billion of clothes made by businesses in Bangladesh, how is this accounted for in the expenditure categories? a. this is spending on a consumer good so GDP rises b. the clothes are imports so they reduce GDP c. the clothes are both consumer goods and imports so GDP doesn't change d. the GDP could rise or fall, it depends on whether the clothes were taxed
In an economy the change in income is $5000 and change in investment is $2000 Find the value of multiplier
3. Categories of expenditures Dmitri and Frances Doherty live in Conshohocken, PA. Their son, Jake, owns his own plumbing business. For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (1), government purchases (G), exports (X), or imports (M). Check all that apply. Transaction Dmitri's employer assigns him to provide consulting services to an Australian firm that's opening a manufacturing facility in China. The Pennsylvania Department of Transportation, a state administration, fixes potholes along PA highway: 23, which feeds into the center of Conshohocken, Frances gets a new video camera made in the United States. Dmitri buys a sweater made in Guatemala. Jake buys a new set of tools to use in his plumbing business. с 00 I O O G O X 0 M O O 0 000 00 000 000
3. Categories of expenditures Shen and Valerie Ferrari live in Swarthmore, PA. Valerie's father, Antonio, lives in Sweden. For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M). Check all that apply. Transaction Shen's employer upgrades all of its computer systems using U.S.-made parts. Valerie gets a new video camera made in the United States. The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore. Valerie's father in Sweden orders a bottle of Vermont maple syrup from the producer's website. Shen buys a bottle of Italian wine. OOOoo 0 I 00000 G 00 000 X 00000 M OC 0 0 0 0
3. Many parts of the economy are related to one another. In particular, a decrease in spending in one area may have an impact somewhere else. Provide an example of this scenario. Economic theory tells us that "one person's spending is another person's income." What is meant by this phrase? Explain in your own words.
Suppose you have the following information about production levels of Ibs. of caviar and bottles of wine, and the market-clearing prices for each of the nine allocations: 5. Caviar Wine Pricecaviar Pricewine GDP Allocation $50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 $166.67 187.50 $350.00 175.00 A 90 100 B 80 200 214.29 250.00 300.00 116.67 87.50 70 300 60 400 E 50 500 70.00 375.00 500.00 58.33 50.00 F 40 600 G 30 700 H 20 800 750.00 43.75 I 10 900 1500.00 38.89 A. How much wine must be sacrificed to produce 1 more lb. of caviar? B. Is allocation point A efficient? (As in class, prove your conclusion with math) C. Which allocation point is efficient? (As in class, prove your conclusion with math) D. Suppose government assesses a tax of $40 per bottle of wine, but no tax on caviar. i) what will be the new equilibrium? Why? ii) how much of the tax is forward shifted? Explain iii) how much of the tax is backward shifted? Explain
Between 2017 and 2018, the exports of the X economy decreased by $5 billion and its imports increased by $5 billion. All else equal? By how much has the GDP changed between the two years? Select one: a. The change in net exports will decrease GDP by $5 billion. O b. The change in net exports will decrease GDP by $10 billion. C. d. The change in net exports will increase GDP by $5 billion. O e. The decrease in exports is offset by the decrease in imports, so there is no change in net exports and no effect on GDP.
4. Do you think that incomes and purchasing power are related? Are companies required to pay their employees more to compensate for higher costs of living?
Suppose that an economy consists of only two individuals. Trevor has $1310 available to spend on goods. He decides to purchase $130 worth of produce from Krista in the current year. No other economic activity takes place during the current year. Using this information, answer the questions. For the current year, what is the economy's income? For the current year, what is the economy's expenditure? In an economy, how are income and expenditure related? O Income is greater than expenditure 24 MacBook Air In an economy, how are income and expenditure related? Income is greater than expenditure. O They are equal. Income is less than expenditure. They are unrelated.
Which of the following types of spending should be not included in Government Purchases, one of the four expenditure components used to measure U.S. Gross Domestic Product? Select one: O a. The federal government purchases an airplane for the U.S. Air Force. O b. The state of Louisiana pays unemployment insurance benefits to qualified unemployed persons. O c. The salaries paid to members of the U.S. Congress. Od. The state of Louisiana pays a construction company to build new roads.