Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 21, Problem 1.3P
To determine
To determine which transaction would be included in the
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Last year, a small nation with abundant forests cut down $200 worth of trees. It then turned $100 worth of trees into $150 worth of lumber. It used $100 worth of that lumber to produce $250 worth of bookshelves. Assuming the country produces no other outputs, and there are no other inputs used in producing trees, lumber, and bookshelves, what is this nation's GDP? In other words, what is the value of the final goods the nation produced including trees, lumber and bookshelves?
Please answer the following question:
There are 2 correct answers
Are the following included in US GDP? Briefly explain your answer.
Used textbooks sold at your college bookstore
Use books sold at a garage sale
Cars made in the United States at a Toyota factory
Cars made in Germany at a General Motors factory
The price paid by an American tourist staying at a French hotel
The price paid by a German tourist staying at a New York hotel
Chapter 21 Solutions
Principles of Economics (12th Edition)
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- look at this (Links https://www.cbsnews.com/news/why-gdp-fails-as-a-measure-of-well-being/) article published by CBS News. Do you agree with the author's assessment that GDP fails to measure well being? Why (or why not)? Are there things that contribute to your well-being and happiness but are excluded from the calculation of GDP? Share an example and describe why it might be excluded from the GDP calculation.arrow_forwardWhich of the following would be counted in U.S. GDP? (objective B3) Question 29 options: The value of a General Electric corporate bond bought by a Japanese citizen The value of a used U.S.-produced car purchased in the U.S. The salary of an American professor teaching in England The value of a new French-produced car purchased by a U.S. citizen within in the U.S. The value of a new U.S.-produced car purchased by a French citizenarrow_forwardWhich of the following statements best describe how economists calculate GDP? Group of answer choices Economists at the Census bureau collect data from surveys sent to consumers, private firms and government agencies and add them up on a yearly basis. Economists at the Bureau of Economic Analysis pull together data on sales, imports, exports, government purchase and investments from various government sources every 3 months. Economists at the Bureau of Labor Statistics collect data from surveys sent to consumers, private firms and government agencies and add them up every 3 months. Economists at the Congressional Budget Office calculate GDP for a given year by adjusting the previous year’s GDP with inflation.arrow_forward
- Paolo and Sharon Zambetti live in Swarthmore, PA. Their son, Van, is an artist living in New York City. 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 C I G X M Paolo buys a bottle of Italian wine. Sharon gets a haircut. Van paints a landscape and sells it to an art collector in Japan. The Zambettis build an addition on their house. The Federal Aviation Administration expands the runways at Philadelphia International Airport, which is just a few miles from Paolo and Sharon's house.arrow_forwardWhich spending category of GDP does each of the following transactions count in? Please enter the letter C, I, G, NX, or N to represent consumption, investment, government spending, net exports, or none. The government paid a total of $30,000 in subsidies to people who had installed solar panels on their homes . Bill spent his $400 social security check on rent and food . Company X produces $5,000 of wine this year but they do not sell it . Your parents pay $8,000 for tuition to UCF . The government pays $1 million to people it hires to collect census dataarrow_forwardQuestion 15 Which of the following would be included in GDP, the purchase of staplers from Staples by a car dealership and by Carl for his kids to play with at home. Both are included in BDP Neither would be included in GDP Carl's purchase would be included but the car dealerships would not The car dealership's purchase would be included but Carl's would not Question 16 Which of the following would lead to growth in GDP Investment in plant and equipment by business Investments in stocks by your 401K Purchase of a home All of the above will lead to GDP growtharrow_forward
- GDP is a good and useful measure of general economic activity for each of the following reasons except for which one? (Which one of the following is not either correct or a reason to rely on GDP as a measure of economic activity?) In order to raise the amount of goods and services available in a country, GDP must rise. In order to have a true measure of economic activity, the income of all people needs to be considered, and the value of goods and services for all people must be considered, and GDP considers the income and spending for all people (in the country). The total value of GDP is lower if the distribution of income is lower and less equitable, and is higher if the distribution is higher and more equitable, and this makes GDP a good indicator of aggregate economic activity. In order to raise the income of some people, and have the income of no people go down, GDP must rise. People care about their income, and GDP is a measure of total income.arrow_forwardA U.S.-owned automobile factory uses $50 million worth of materials produced in the U.S. and $10 million worth of material purchased from foreign countries to produce $100 million of automobiles. $70 million worth of these automobiles are purchased by U.S. consumers, $25 million are sold in foreign countries, and $5 million are added to inventory. How much of this production is included in U.S. GDP? By how much do these transactions alone affect U.S. net exports?arrow_forwardProblem #28- Last year, a small nation with abundant forests cut down $200 worth of trees. $100 worth of trees were then turned into $150 worth of lumber. $100 worth of that lumber was used to produce $250 worth of bookshelves. Assuming the country produces no other outputs, and there are no other inputs used in the production of trees, lumber, and bookshelves, what is this nation’s GDP? In other words, what is the value of the final goods produced including trees, lumber and bookshelves?arrow_forward
- Which of the following transactions should or should not be counted in GDP? Answer Yes or No and briefly explain your answer. Answers without explanation will not be considered in grading, even if they are correct. a. You buy a pair of new cowboy boots on a trip to Texas b. You buy a pair of vintage cowboy boots from your cousin in El Paso c. A cat burglar sells $10,000 of stolen jewelry to a fence d. Amazon issues $1 billion worth of new shares e. GM purchases $100 million worth of tires from Firestone f. A private company builds a new road in Memphis Y g. Stay-at-home parents provide an estimated $500 million of child care servicesarrow_forwardA country has just one resource - labor - that it can use to produce two goods, books and clothing. At first the country has 10 million workers, and each worker can produce either 2 books or 5 units of clothing per day. Suppose the country wants to produce 8 million books. Suppose the price of a book is $10, and the price of a unit of clothing is $20. Using this information and your answer from the last question, calculate the country's GDP (measured in dollars per day). Enter your answer as a number in the space below. (For example, if your answer is $3.75 million, enter it as 3750000 in the space below.)arrow_forwardSuppose the information in the following table is for a simple economy that produces only four goods and services: shoes, hamburgers, shirts, and cotton. Assume that shoes, hamburgers, and shirts are final goods and that all the cotton is used in the production of shirts. Calculate the GDP deflator for 2015. Use 2009 as the base year for the calculations. Provide your answer as a number rounded to two decimal places. Do not include any symbols, such as "$," "=," "%," or "," in your answer.arrow_forward
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