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
The University of Chicago, a privately-owned school, is currently building a new hospital. This will be classified in U.S. GDP as ________, because ____________.
Group of answer choices
A.consumption; it will provide medical services to consumers
B.net exports; most construction workers are foreigners
C.government purchases; the construction constitutes government expenditure
D.investment; it increases the capital stock
Consider the following data for a hypothetical economy that produces two goods, milk and honey.
Prices
Year 1
Year 2
Quantity Produced
milk (litres)
100
135
honey (kg)
35
22
a. Compute nominal GDP for each year in this economy.
Nominal GDP in year 1: $
Nominal GDP in year 2: $
milk ($/litre)
4
3
honey ($/kg)
3
4
(Round your response to the nearest whole number.)
(Round your response to the nearest whole number.)
The percentage change in nominal GDP from year 1 to year 2 is%. (Round your response to two decimal places.
Use the minus sign to enter negative numbers.)
b. Using year 1 as the base year, compute real GDP for each year using the traditional approach.
Real GDP in year 1year 1 prices- $
Real GDP in year 2year 1 prices
(Round your response to the nearest whole number.)
(Round your response to the nearest whole number.)
The GDP deflator in year 1year 1 prices
The GDP deflator in vear?
The percentage change in real GDP from year 1 to year 2 is%. (Round your response to two decimal…
Chapter 25 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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- When the Japanese car maker Toyota expands one ofits car factories in the United States, what is the likelyimpact of this event on the gross domestic productand gross national product of the United States?a. GDP rises and GNP falls.b. GNP rises and GDP falls.c. GDP and GNP both rise but GDP rises by more.d. GDP and GNP both rise but GNP rises by more.arrow_forwardClassify each of the following items as a final good or service or an intermediate good or service, and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services. A. A textbook bought by a student B. A computer purchased for a senator's office C. New cars bought by Hertz, the car rental firm D. Aluminum sheets bought by Boeing 1. A is a final good that is consumption expenditure, B is a final good that is government expenditure, C is a final good that is investment, and D is an intermediate good. 2. A is a final good that is investment, B is an intermediate good, C is a final good that is investment, and D is an intermediate good. 3. A is a final good that is consumption expenditure, B is an intermediate good, C is a final good that is consumption expenditure, and D is a final good that is investment. 4. A is a final good that is consumption expenditure, B is a final good…arrow_forward3. For each of the following events, what is the likely effect on GDP? a. an increase in government military spending due to the war in Ukraine b. Prostitution is made legal across the country. c. A miller sells flour to a baker. d. A miller sells flour to a final consumer. e. There is a large decline in the consumption of cigarettes. f. There is a large decline in the consumption of heroin. g. There is an increase in divorce rates.arrow_forward
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- Question 3arrow_forwardConsider the following data for a hypothetical economy that produces two goods, milk and honey. Quantity Produced milk (litres) Year 1 105 Year 2 125 Prices honey (kg) milk ($/litre) honey ($/kg) 40 4 5 18 3 4 a. Compute nominal GDP for each year in this economy. Nominal GDP in year 1: $ Nominal GDP in year 2: $ (Round your response to the nearest whole number.) (Round your response to the nearest whole number.) The percentage change in nominal GDP from year 1 to year 2 is ☐ (Round your response to two decimal places. Use the minus sign to enter negative numbers.) b. Using year 1 as the base year, compute real GDP for each year using the traditional approach. Real GDP in year 1 year 1 prices Real GDP in year 2 year 1 prices (Round your response to the nearest whole number.) (Round your response to the nearest whole number.)arrow_forwardUse the information in the table to answer the following questions. All numbers are in billions of 2012 dollars. Real GDP (Y) Consumption (C) Planned Investment (I) Government Purchases (G) Net Exports (NX) $15,000 $11,750 $1,500 $3,000 -$500 $16,000 $12,500 $1,500 $3,000 -$500 $17,000 $13,250 $1,500 $3,000 -$500 $18,000 $14,000 $1,500 $3,000 -$500 $19,000 $14,750 $1,500 $3,000 -$500 The equilibrium level of GDP is $ 18,000 billion. The MPC is (enter your response to two decimal places).arrow_forward
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