The following provides data for an economy in a certain year.Consumption expendituresImportsGovernment purchases of goods and services $700$1,000$600Construction of new homes and apartments $500$600$500$300$600Sales of existing homes and apartmentsExportsGovernment transfer paymentsHousehold purchases of servicesBeginning-of-year inventoryEnd-of-year inventory$500$600$300Business fixed investmenta.) How much did households spend on goods (durable and nondurable) during this year?[ Select ]b.) Compute the investment component (I) of GDP. [Select ]c.) After consumption, which sector of the economy contributed the most to GDP?[ Select ]d.) Does this economy have a trade deficit or a trade surplus?[ Select ]e.) What is the GDP for this economy? [ Select ]f.) What method are we using here to compute GDP? [ Select ]

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Answered: Consumption expenditures Imports…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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GDP in an economy is $23,600 billion. Consumer expenditures are $18,000 billion, corporate profits are 600 billion, government purchases are $6,000 billion, and gross private domestic investment is $300 billion, stock purchases are $500 billion. What is the value of the net exports? O+$400 billion O-$700 billion O-$1.800 billion O-$300 billion O+$500 billion
None
2. Which of the following is NOT included in the calculation of GDP? a) Investment spending b) Government spending
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.
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
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
5. Problems and Applications Q9 A farmer grows wheat and sells to a miller for $90. The miller turns the wheat into flour and sells the flour to a baker for $145. The baker turns the wheat into bread and sells the bread to consumers for $155. Consumers eat the bread. Assume that these transactions account for all economic activity in this economy. GDP in this economy is S Value added is defined as the value of a producer's output minus the value of the intermediate goods that the producer buys to make the output. Assuming there are no intermediate goods beyond those just described, complete the following table by calculating the value added for each of the three producers. Then enter the total value added in the final row. Producer Farmer Miller Baker Total Value Added True or False: The total value added for the three producers in this economy equals the economy's GDP. True (Dollars) False
6. Use the following table to answer the question: Items Cash receipts from farm marketing Receipts of government payments Other income from farm sources Production expenses Value of real estate assets Items Value of non-real estate assets Financial assets Liabilities a. What is the Gross Farm Income? b. What is the Net Farm Income? Dollar $750,000 $150,000 $100,000 $400,000 $10 million Dollar $2 million $4 million $9 million

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