The items included in the calculation of the
Answer to Problem 1KC
Option 'e' is correct.
Explanation of Solution
The Gross Domestic Product is the sum total of the money values of all the goods and services produced within the political boundary of an economy within a specific period of time which is usually one financial year. The money value of all the final goods and services that are produced within the economy will be summated in order to calculate the GDP.
Option (e):
The GDP calculation includes the monetary value of all the final goods and services produced within the economy in the financial year only. Since the value of the used car is already included in the GDP calculation of the year in which it was produced, it will not go for double entry. The Apple stocks are not considered as the services and are also not included. The homemaker's services are also not included in the GDP calculation and also the same idea of the used car is applied on the Gulf war military surplus sale which means none of the given is included in the GDP calculation and that means option 'e' is correct.
Option (a):
The current exchanges in the stocks and bonds, the government security and welfare payments etc are not included in the GDP calculations. This means that the purchase of 100 shares of Apple stock is a financial asset and not a newly produced good. This means that the transaction is not included in the GDP calculation and that makes option 'a' incorrect.
Option (b):
One product will be counted for only once in the GDP calculation and that means when there is a resale of the product, it will not be accounted for the GDP calculations. Thus, the value of the car will be included in the year in which it was produced and that means the resale will not be accounted for GDP and therefore, option 'b' is incorrect.
Option (c):
The Homemaker's services are not easily valued because they do more than the accountable work of the maid. They do such works without any remuneration and that means the work is an unpaid and nonmarket transaction which makes the inclusion of the homemaker's services not possible in the GDP calculation and thus are not included. This means that the option 'c' is also incorrect.
Option (d):
Since gulf war military surplus is not produced in the year and is already accounted for the year in which they were produced, just like the sale of the used car, it will not be included in the GDP calculation. Thus, option 'd' is incorrect.
Gross Domestic Product: The GDP is the sum total of the money value of all the final goods and services produced within the political boundary of a country within the financial year.
Want to see more full solutions like this?
- Discuss the impact of exchange rate volatility on the economy and its impact on your organisation. Make use of the relevant diagrams.arrow_forwardMacroeconomic policies have different effects on the price level and output (national income). Discuss the impact of a monetary policy that seeks to encourage economic growth.arrow_forwardCan you please help with this one. Some economists argue that taxing consumption is more efficient than taxing income. Following the same argument, the minister of finance of a country introduced a new tax for sugar based products “sugar tax” to promote healthy eating in the economy. Please use relevant diagrams to explain the impact of the tax on consumers, producers and the tax revenue when sugar is elastic and inelastic.arrow_forward
- profit maximizing and loss minamization fire dragon co mindtaparrow_forwardProblem 3 You are given the following demand for European luxury automobiles: Q=1,000 P-0.5.2/1.6 where P-Price of European luxury cars PA = Price of American luxury cars P, Price of Japanese luxury cars I= Annual income of car buyers Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test). On the basis of the information given, answer the following questions 1. Comment on the degree of substitutability between European and American luxury cars and between European and Japanese luxury cars. Explain some possible reasons for the results in the equation. 2. Comment on the coefficient for the income variable. Is this result what you would expect? Explain. 3. Comment on the coefficient of the European car price variable. Is that what you would expect? Explain.arrow_forwardProblem 2: A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q=+15,000-2.80P+150A+0.3P+0.35Pm+0.2Pc (5,234) (1.29) (175) (0.12) (0.17) (0.13) R²=0.68 SER 786 F=21.25 The variables and their assumed values are P = Price of basic model = 7,000 Q==Quantity A = Advertising expenditures (in thousands) = 52 P = Average price of a personal computer = 4,000 P. Average price of a minicomputer = 15,000 Pe Average price of a leading competitor's workstation = 8,000 1. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies? 2. Conduct a t-test for the statistical significance of each variable. In each case, state whether a one-tail or two-tail test is required. What difference, if any, does it make to…arrow_forward
- You are the manager of a large automobile dealership who wants to learn more about the effective- ness of various discounts offered to customers over the past 14 months. Following are the average negotiated prices for each month and the quantities sold of a basic model (adjusted for various options) over this period of time. 1. Graph this information on a scatter plot. Estimate the demand equation. What do the regression results indicate about the desirability of discounting the price? Explain. Month Price Quantity Jan. 12,500 15 Feb. 12,200 17 Mar. 11,900 16 Apr. 12,000 18 May 11,800 20 June 12,500 18 July 11,700 22 Aug. 12,100 15 Sept. 11,400 22 Oct. 11,400 25 Nov. 11,200 24 Dec. 11,000 30 Jan. 10,800 25 Feb. 10,000 28 2. What other factors besides price might be included in this equation? Do you foresee any difficulty in obtaining these additional data or incorporating them in the regression analysis?arrow_forwardsimple steps on how it should look like on excelarrow_forwardConsider options on a stock that does not pay dividends.The stock price is $100 per share, and the risk-free interest rate is 10%.Thestock moves randomly with u=1.25and d=1/u Use Excel to calculate the premium of a10-year call with a strike of $100.arrow_forward
Survey of Economics (MindTap Course List)EconomicsISBN:9781305260948Author:Irvin B. TuckerPublisher:Cengage Learning
