Explain why the GDP is higher this year than last year.

Question

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Answer 1

Question

Chapter 7, Problem 1QP

To determine

Explain why the GDP is higher this year than last year.

Expert Solution & Answer

Explanation of Solution

In this case, the statement does not refer to the real GDP because it refers to the nominal GDP. In general, increase in nominal GDP was due to higher price. If the real GDP increases, then the countries’ well-being will decrease, bad associated with the increased production of goods and services. Therefore, if the population grows faster than GDP, then the country’s per capita GDP will decrease in an economy.

Economics Concept Introduction

GDP (Gross Domestic Product): GDP refers to the market value of all final goods and services produced in an economy during an accounting year.

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5. Download the Excel sheet from Brightspace. The data contains the GDP per capita and GNI per capita of OECD member countries in 2014 (both figures are reported in US dollars). The countries are ranked by GDP per capita. a. Compute the ratio of GNI to GDP for each country (GNI per capita/GDP per capita). What does this imply about net factor income from abroad for each country? b. Rank the countries based on the GNI/GDP ratio, starting with the country with the highest ratio and ending with the country with the lowest ratio. Which country has the highest ratio, and which has the lowest? c. Comment on why the countries you identified in the previous question have a large difference between GDP and GNI? What does the difference imply?

3. Answer the following questions about external wealth. a. Home has external wealth of $100 million in period t. In t+1, Home purchases $160 million foreign assets, and Foreign purchases $120 million in Home assets. Assume a world interest rate of 10% per annum. Compute the "change" in external wealth at t+1 for Home. b. A country's external wealth was -$1.5 billion at the end of 2015, and its trade balance was $750 million in 2016. Assume the world interest rate is 5% per annum. What is the "value" of a country's external wealth at the end of 2016?

Answer 2

Question

Chapter 7, Problem 1QP

To determine

Explain why the GDP is higher this year than last year.

Expert Solution & Answer

Explanation of Solution

In this case, the statement does not refer to the real GDP because it refers to the nominal GDP. In general, increase in nominal GDP was due to higher price. If the real GDP increases, then the countries’ well-being will decrease, bad associated with the increased production of goods and services. Therefore, if the population grows faster than GDP, then the country’s per capita GDP will decrease in an economy.

Economics Concept Introduction

GDP (Gross Domestic Product): GDP refers to the market value of all final goods and services produced in an economy during an accounting year.

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Answer 3

Question

Chapter 7, Problem 1QP

To determine

Explain why the GDP is higher this year than last year.

Expert Solution & Answer

Explanation of Solution

In this case, the statement does not refer to the real GDP because it refers to the nominal GDP. In general, increase in nominal GDP was due to higher price. If the real GDP increases, then the countries’ well-being will decrease, bad associated with the increased production of goods and services. Therefore, if the population grows faster than GDP, then the country’s per capita GDP will decrease in an economy.

Economics Concept Introduction

GDP (Gross Domestic Product): GDP refers to the market value of all final goods and services produced in an economy during an accounting year.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 7, Problem 1QP

To determine

Explain why the GDP is higher this year than last year.

Expert Solution & Answer

Explanation of Solution

In this case, the statement does not refer to the real GDP because it refers to the nominal GDP. In general, increase in nominal GDP was due to higher price. If the real GDP increases, then the countries’ well-being will decrease, bad associated with the increased production of goods and services. Therefore, if the population grows faster than GDP, then the country’s per capita GDP will decrease in an economy.

Economics Concept Introduction

GDP (Gross Domestic Product): GDP refers to the market value of all final goods and services produced in an economy during an accounting year.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 7, Problem 1QP

To determine

Explain why the GDP is higher this year than last year.

Expert Solution & Answer

Explanation of Solution

In this case, the statement does not refer to the real GDP because it refers to the nominal GDP. In general, increase in nominal GDP was due to higher price. If the real GDP increases, then the countries’ well-being will decrease, bad associated with the increased production of goods and services. Therefore, if the population grows faster than GDP, then the country’s per capita GDP will decrease in an economy.

Economics Concept Introduction

GDP (Gross Domestic Product): GDP refers to the market value of all final goods and services produced in an economy during an accounting year.

Answer 6

Chapter 7, Problem 1QP

To determine

Explain why the GDP is higher this year than last year.

Expert Solution & Answer

Explanation of Solution

In this case, the statement does not refer to the real GDP because it refers to the nominal GDP. In general, increase in nominal GDP was due to higher price. If the real GDP increases, then the countries’ well-being will decrease, bad associated with the increased production of goods and services. Therefore, if the population grows faster than GDP, then the country’s per capita GDP will decrease in an economy.

Economics Concept Introduction

GDP (Gross Domestic Product): GDP refers to the market value of all final goods and services produced in an economy during an accounting year.

Answer 7

Chapter 7, Problem 1QP

To determine

Explain why the GDP is higher this year than last year.

Answer 8

Expert Solution & Answer

Explanation of Solution

In this case, the statement does not refer to the real GDP because it refers to the nominal GDP. In general, increase in nominal GDP was due to higher price. If the real GDP increases, then the countries’ well-being will decrease, bad associated with the increased production of goods and services. Therefore, if the population grows faster than GDP, then the country’s per capita GDP will decrease in an economy.