Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 25, Problem 5QCMC
To determine
The effect of foreign investment.
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When the Japanese car maker Toyota expands one of its car factories in the United States, What is the likely impact of this event on the gross domestic product and gross national product of the United States?
a.GDP rises and GNP falls.
b.GNP rises and GDP falls.
c. GDP shows a larger increase than GNP
d. GNP shows a larger increase than GDP
Jane spends $1,200 on a used computer. How will this calculation effect GDP?
A.) Consumption will rise and GDP will rise
B.) Investment will rise and GDP will rise
C.) Since the good was not currently produced consumption will not rise, neither will GDP
D.) The GDP deflator will rise but not real GDP
Identify the immediate effect of each of the following events on the U.S. GDP. List the affected component(s) of U.S. GDP for each situation if there is a change. Briefly explain the reasons if there is no change to GDP. Assume the person described by each event is an American citizen who works and lives in the U.S. Please notice that each following event is independent of one another.
A. Linda pays the college tuition fee for her daughter.
B. James receives a social security check from the US government.
C. John buys a sports car which is made in Italy.
D. Henry buys domestically produced machinery for his start-up construction business..
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Principles of Economics, 7th Edition (MindTap Course List)
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