Macroeconomics (Book Only)
12th Edition
ISBN: 9781285738314
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
Macroeconomics (Book Only)
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. 1VQPCh. 7 - Prob. 2VQP
Ch. 7 - Prob. 3VQPCh. 7 - Prob. 4VQPCh. 7 - Prob. 5VQPCh. 7 - Prob. 1QPCh. 7 - Prob. 2QPCh. 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. 1WNGCh. 7 - Prob. 2WNGCh. 7 - Prob. 3WNGCh. 7 - Prob. 4WNGCh. 7 - Prob. 5WNGCh. 7 - Prob. 6WNGCh. 7 - Prob. 7WNGCh. 7 - Prob. 8WNG
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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
- If consumption is 10, investment 5, government purchases 6, exports 8, and imports 7, what is GDP?arrow_forwardGiven 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_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
- If 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_forwardUse 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 2.8 .8 Rent .7 Interest Wages .8 8.2 Depreciation Consumption Government spending 1.3 11.0 1.8 Imports 1.7 Social Security contributions 2.0 Exports 1.5 Government transfer payments 2.0 Personal income taxes and nontax 1.7 payments Corporate taxes and retained .5 earnings GDI = 14.6 GDP = 14.6 ' , gross private domestic investment = 2, personal income = 12, personal disposable income= 10.3 Fill in numbers only; one decimal place; e.g. 10.0arrow_forwardPaolo 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_forward
- Use 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_forwardThe table below shows the values for several different components of GDP. Composition of Gross Domestic Product Component LA Consumer durables Consumer nondurables Services Business fixed investment Residential fixed investment Inventories Exports Imports Government purchases What is the value of total gross investment? Instructions: Round your answer to 1 decimal place. Value (billions of dollars) $1,292.7 2,615.4 8,038.8 2,805.0 558.5 80.4 billion 2,320.5 2,863.1 3,093.6arrow_forwardGross domestic product (GDP) is a measurement of the total value of all goods and services produced in the United States over a given time period. It is used by economists, government officials, market forecasters and others to gauge the overall health of the U.S. economy. How do consumers drive the nation's GDP?arrow_forward
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