Business Macroeconomics
Sam, an American citizen, prepares meals for his family at home. Ellen, a Canadian citizen, commutes to the U.S. to help prepare meals at a restaurant in Idaho. Whose value of services preparing meals is included in U.S. GDP?
Ellen's but not Sam's
Consider two cars manufactured by Chevrolet in 2014. During 2014, Chevrolet sells one of the two cars to Emily for $20,000. Later in the same year, Emily sells the car to Jim for $18,000. The second automobile, with a market value of $19,000, is unsold at the end of 2014 and it remains in Chevrolet's inventory. The transactions just described contribute how much to GDP for 2014?
Emily 20,000+market value 19,000
Period of time
GDP expresses production during a
Period of time
GDP expresses production during a time period
Which of the following statistics is the best single measure of happiness?
GDP per capita
The GDP of Brazilia is 9,667,667 and the GDP of Geo is 518,145. Moreover, the population of Brazilia is 19632 and the population of Geo is 4,778 more people than Brazilia. What is the GDP per capita of the Country with the lowest popuation?
GDP per capita =GDP/Population for Brazilia 492.44
GDP per capita =
GDP/ population
G
Government Consumption expenditures and gross investment (government spending)
M- imports
goods and services produced abroad but sold domestically
Nominal GDP=
is the GDP using current prices
Real GDP
is the GDP using fixed or constant prices
X- exports
( goods and services produced domestically but sold abroad)
Real GDP=
(Nominal GDP/ GDP Deflator) x 100
Transfers
-Social security payments -Medicaid -Medicare -Welfare ,SSI, SNAP
Govt spending
-Teachers pay -Polices pay -Highway
Volkswagen company is Germany own company with a massive factory in Mexico. In 2013,the Volkswagen Mexican factory produced $248 worth of cars and sold $15 to the U.S., $81 to Mexico, and $6 to Germany. How much was added to Germany's GDP?
0
Volkswagen company is Germany own company with a massive factory in Mexico. In 2013, the Volkswagen Mexican factory produced $234 million worth of cars and sold $82 million to the U.S., $62 million to Mexico, and $76 million to Germany. How much was added to Mexico's GDP?
234
Suppose that an economy produces 20,000 units of good A which sells at $3 a unit and 40,000 units of good B which sells at $1 per unit. Production of good A contributes
3/2 times as much to GDP as the production of good B.
Texas Beer Company sold $438,443 worth of beer it produced. In producing the beer, it purchased $83,689 worth of ingredients from foreign countries and paid workers who reside in Mexico but commute to the U.S. $34,064. How much did these transactions add to U.S. GDP?
438,443-83689=354,754
Peter sells cars. In 2014 he added $451,954 to her inventory. $222,856 of this addition was from used cars he purchased and the remaining amount was from his purchases of newly produced cars. How much of Peter's inventory is included in 2014's GDP?
451,954-222,856=229,098
Peter sells cars. In 2012 he added $557,058 to her inventory. $200,292 of this addition was from used cars he purchased and the remaining amount was from his purchases of newly produced cars. How much of Peter's inventory is included in 2012's GDP?
557,058- 200,292=356,766
consumption expenditures
69.1% of GDP)
Santiago is from Spain but lives in Texas.Ryan is from England but he lives in Arizona .A car dealer in Texas buys a new BMW from a BMW factory in Arizona for 55,621 and later sells the new BMW to the final buyer , who is Santiago for79,992. Later the same year, Santiago sells the now used BMW to Ryan in Arizona for 51,075. How much was contributed to US GDP from all these transactions?
79,992
Suppose that an economy produces 40,000 units of good A which sells at $4 a unit and 20,000 units of good B which sells at $5 per unit. Production of good A contributes
8/5 times as much to GDP as the production of good B
Social Security payments are
excluded from GDP because they do not reflect the economy's production
GDP=
C+I +G+NX
I
Gross Private Domestic Investment
L (16.7 % of GDP)
Gross private domestic investment. Purchased of goods and services by firms that are used to produce something else in the future
Investment is not
I.Purchase of stocks ,bonds ,financial instrument II.Put money in the bank
GDP goes up 3% in the 2nd of 2018
May 2017 - June 2018 -3% higher May 2016 - June 2017
Real GDP is
Nominal GDP at the base year
Real GDP per capita =
Real GDP /Population
Production=
Sales + Change in Inventories
An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?
The value of the goods and services produced by the restaurant is included in French GDP, but not in U.S. GDP.
In the United States real GDP is reported each quarter.
These numbers are adjusted to make them measure at annual and seasonally adjusted rates.
4. NX (-3%):%): Net exports
Transactions with the rest of the world
NX =
X-M
Govt spending is
an outlay of money where the govt gets a good or service in return for that money
GDP is trying to measure production
by looking at sales (final sales )
According to the circular-flow diagram GDP
can be computed as the total income paid by firms or as expenditures on final goods and services.
The Carters' oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as
consumption of services.
Consumption is very stable
does not fluctuate much year to year
Consumption is very stable because
household are consumption smoothers
Grapes are considered intermediate goods
if the purchaser uses them to make wine to sell others but not if the purchaser eats them.
Transfer are NOT
included in GDP
Which of the following subcomponents of GDP can be either positive or negative?
inventory investment
Purchasing Power party (PPP)
is an adjustment done to reflect the face that the cost of living is different across countries.
Final Goods and Services
is that is consumed by end consumer and it is not transformed further for sale
GPD
is the main measure of production and income of a region and it is the most important concept in Macroeconomic
What is GPD ?
is the market value of all final goods and service produced in a region (country) during a given period of time .
Base price =
is the price that remains fixed
Government purchases include spending on goods and services by
local, state and federal governments.
Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of
market prices
Transactions involving items produced in the past, such as the sale of a 5-year-old automobile by a used car dealership or the purchase of an antique rocking chair by a person at a yard sale, are
not included in current GDP because GDP only measures the value of goods and services produced in the current year.
Transfers is an outlay
of money with no service or good purchased in return
Consider the following three items of spending by the government: (i) the federal government pays a $500 unemployment benefit to an unemployed person; (ii) the federal government makes a $2,000 salary payment to a Navy lieutenant; (iii) the city of Bozeman, Montana makes a $10,000 payment to ABC Lighting Company for street lights in Bozeman. Which of these payments contributes directly to government purchases in the GDP account?
only items (ii) and (iii)
4.2 % would be the growth if the
pace activity measured for the quarter was maintained for the full year
C
personal consumption expenditures
GDP =
production = income
GDP wants to measure
production by looking at final sales.
Production =
sales + change in inventory
GDP per capita
tells he how much each person get per year if all the income generated that year was divided equals among every person = GDP/population
GDP goes up 3% in
the 2nd of 2018 May 2017 - June 2018 -3% higher May 2016 - June 2017
GDP is reported by
the Bureau of Economics Analysis (BEA)
For an economy as a whole,
the market value of production must equal expenditure.
Macroeconomics
the study of aggregate economic activity
Base year
the year for which we set the price constant is called base year