Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 7, Problem 2WNG
To determine
Estimate the spending on durable goods.
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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 services
There are four spending groups that buy GDP: consumption, investment, government purchases, and net exports. Which group is the largest? Which one fluctuates the most?
The following are national income account data for a hypothetical economy in billions of dollars: gross private domestic investment ($320), imports ($40), exports ($22), personal consumption expenditures ($2,460), and government purchases ($470). What is GDP in this economy?
Chapter 7 Solutions
Economics (MindTap Course List)
Ch. 7.1 - Prob. 1STCh. 7.1 - Prob. 2STCh. 7.2 - Prob. 1STCh. 7.2 - Prob. 2STCh. 7.2 - Prob. 3STCh. 7.4 - Prob. 1STCh. 7.4 - Prob. 2STCh. 7.4 - Prob. 3STCh. 7 - Prob. 1QPCh. 7 - Prob. 2QP
Ch. 7 - Prob. 3QPCh. 7 - Prob. 4QPCh. 7 - Prob. 5QPCh. 7 - Prob. 6QPCh. 7 - Prob. 7QPCh. 7 - Prob. 8QPCh. 7 - Prob. 9QPCh. 7 - Prob. 10QPCh. 7 - Prob. 11QPCh. 7 - Prob. 12QPCh. 7 - Prob. 13QPCh. 7 - Prob. 14QPCh. 7 - Prob. 1WNGCh. 7 - Prob. 2WNGCh. 7 - Prob. 3WNGCh. 7 - Prob. 4WNGCh. 7 - Prob. 5WNGCh. 7 - Prob. 6WNGCh. 7 - Prob. 7WNGCh. 7 - Prob. 8WNGCh. 7 - Prob. 9WNGCh. 7 - Prob. 10WNGCh. 7 - Prob. 11WNG
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- Use the table to find GDI, GDP, gross private domestic investment, personal income, and personal disposable income. (All amounts in trillions of dollars.) Profit Indirect business taxes Rent Interest Wages Depreciation Consumption Government spending Imports Social Security contributions Exports Government transfer payments Personal income taxes and nontax payments Corporate taxes and retained earnings 2.8 .8 .7 .8 8.2 1.3 11.0 1.8 1.7 2.0 1.5 2.0 1.7 .5 Please discuss what formula you are using to get each one of the answers.arrow_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_forwardif consumption is $3.8 trillion, investment is $1.1 trillion, government spending is $1.1 trillion, imports are $1.6 trillion, and exports are $1.4 trillion, how much is GDP?arrow_forward
- The table below includes data for a one-year period required to calculate GDP from the income side for a teeny-tiny economy. Gross investment expenditure Wages and salaries Consumption expenditure Interest and investment income Business profits Depreciation Indirect taxes less subsidies Net exports TABLE 20-4 $402.00 $1741.00 $1302.40 $99.40 $70.40 $199.20 $175.20 $94.00 Refer to Table 20-4. What is the value of GDP, as calculated from the income side? $2010.00 $1982.60 $1986.00 $2584.40 $2285.20arrow_forwardIf consumption is 10, investment 5, government purchases 6, exports 8, and imports 7, what is GDP?arrow_forwardlook 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_forward
- Given the following information, calculate personal consumption expenditures. GDP $5,000 Gross Private Domestic Investment $1,500 Government Consumption Expenditures and Gross Investment $1,000 Net Exports -$500arrow_forward$3 trillion$6 trillion$8.5 trillion$11.5 trillionarrow_forwardCategory Expenditures (billions of dollars) Fixed business investment $2,950.00 Durable goods $2,300.00 Exports $700.00 Federal government purchases $1,250.00 New home construction $1,300.00 Imports $840.00 Change in inventories $-200.00 Nondurable goods $4,800.00 Services $9,450.00 State and local government purchases $2,100.00 Use the information in the table to calculate the following:(a) Consumption: $ billion(b) Investment: $ billion(c) Government: $ billion(d) Net exports: $ billion(e) GDP: $ billionarrow_forward
- Total spending in the economy is equal to consumption plus investment plus government spending plus net exports. If households want to save and thus do not use all of their income for consumption, what will happen to total spending? Because total spending in the economy is equal to total income and output, what will happen to the output of goods and services if households wants to save more?arrow_forwardLast 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?arrow_forwardIf consumption expenditure is $30 billion, investment spending is $15 billion, government spending is $12 billion, exports are $4 billion and imports $5 billion, GDP will bearrow_forward
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