Econ 201 Billy Lemus, HW19 - Chapter 19 Questions 1-20

1) What does the investment component of GDP measure? A. spending by households on goods and services B. spending on goods to be used in future production C. spending on domestically produced goods by foreign buyers D. spending by government agencies on goods and services 2) A good produced in the current time period but put into a firm's inventory instead of being sold A. is excluded from current GDP. B. is considered unsold inventory and counted as a part of investment in current GDP. C. is only included as a part of consumption in future GDP when it is sold. D. is counted as consumption in current GDP since it was produced in the current time period.

1) B. spending on goods to be used in future production 2) B. is considered unsold inventory and counted as a part of investment in current GDP.

The U.S. GDP in 2008 was $14,291.5 billion, and the previous year the GDP was $14,028.7 billion. What was the rate of growth in GDP in 2008?

1.87%

Suppose the country of Lilliput exported $255 billion worth of goods and imported $497 billion worth of goods in the last calendar year. a. Calculate Lilliput's balance of trade. b. Which type of trade balance is Lilliput running? - neither a trade deficit nor a trade surplus - a trade deficit - a trade surplus

A) $ -242 Billion B) A trade deficit

Consider the table of GDP and population for several imaginary countries. A. What is the GDP per capita of Longhornland in U.S. dollars? Express your answer rounded to one decimal place. B. What is the GDP of Dinkytown in millions of U.S. dollars? Express your answer rounded to one decimal place.

A. $15.9 B. $226.1

Please match the hypothetical scenarios with the correct type of good. A. Pierre produces cheese in France and ships it to his sister living in Canada, who then sell sit in her local bakery. B. In her capacity as an FBI agent, Jean purchases a new vehicle for use by the agency to track missing persons. C. Wanda purchases six new sewing machines for her tailoring business, which she hopes will increase the number of custom alterations she can perform each week.

A. Export goods & services B. Government goods & services C. Capital goods

In what way(s) does GDP per capita not provide an accurate representation of living standards?

GDP per capita does not measure production that occurs outside of the market economy. GDP per capita does not account for changes in environmental quality. GDP per capita does not account for how people distribute their time between work and leisure.

The GDP deflator formula can be used in a variety of ways. Use it to answer the questions that follow. Round final answers to two decimal places, as needed. 2012: Real GDP= $2300 2012: GDP Deflator= 130 2010: Nominal GDP= $700 2010 Real GDP= $300 2011: Nominal GDP= $1700 2011 Real GDP= $1500 2013: Nominal GDP= $3600 2013: GDP Deflator= 150

Nominal GDP in 2012 = $2990 2010 GDP Deflator = 233.33 2011 GDP Deflator = 113.33 Real GDP in 2013 = $2400

Consider the information about the economy of Pakistan. Note that the currency of Pakistan is the rupee. The government purchases: 3.00 trillions of rupees. Individuals consume: 8.80 trillions of rupees. Individuals save: 5.08 trillions of rupees. Businesses invest: 1.20 trillions of rupees. Foreigners spend: 0.56 trillions of rupees to purchase Pakistani firms. Pakistan imports: 1.98 trillions of rupees. Pakistan exports: 1.24 trillions of rupees. Calculate Pakistan's GDP. Assume that the values are all current and no conversions need to be made. Give your answer in terms of trillions of rupees, and round to two decimals.

Pakistan's GDP = 12.26 trillions of rupees

The graph shows a business cycle for a hypothetical economy. Label all five areas on the graph using the appropriate economic term. Some of the terms may refer to more than one area on the graph, and some terms may not refer to any of the areas on the graph.

Top Left: Peak Middle right: Trough Bottom left: Recession Bottom middle: Expansion Bottom right: Recession

Categorize the terms based on whether they are used to calculate GDP based on the components of demand (also known as the expenditure approach) or by what is produced. If a term does not belong in either category, please leave it unplaced. Used to measure demand‑based GDP, or the national spending approach or Used to measure production‑based GDP

Used to measure demand‑based GDP, or the national spending approach - Consumption - Government - Investment - Trade balance Used to measure production‑based GDP - Durable final good - Non durable final good - Services - Structures - Change in inventories

Consider the table. 2013: Shirts Price: $7.50 / Quantity: 750 Pants Price: $12.50 / Quantity: 4000 2014: Shirts Price: $12 / Quantity 600 Pants Price: $18.50 / 3500 a. What is nominal GDP in 2014? b. What is real GDP in 2014? Use 2013 as the base year. c. Real output from 2013 to 2014 has

a. 71,950 b. 48,250 c. decreased

The market value of which of the items would be considered double (or multiple) counting in the calculation of GDP? Please place items into the appropriate category. a. A new skateboard you buy for your niece b. Wheels used to produce a skateboard that will be sold new c. A used copy of the Tony Hawk video game d. A used skateboard you buy for your brother e. A previously-owned collectors' skateboard f. The commission paid to the seller of a previously-owned collectors' skateboard g. A ticket for the X Games bought from a person on a street corner h. A new building for Tony Hawk Industries

a. Included in GDP b. Not included in GDP because of double-counting c. Not included in GDP because of double-counting d. Included in GDP e. Not included in GDP because of double-counting f. Included in GDP g. Included in GDP h.Included in GDP

Determine whether each description refers to nominal gross domestic product (GDP) or real GDP. a. A measure of an economy's output using current prices. b. A measure of an economy's output using constant prices. c. A measure of output that is adjusted for inflation. d. A measure of output that is not adjusted for inflation.

a. Nominal GDP b. Real GDP c. Real GDP d. Nominal GDP

Classify the given goods according to whether or not they would be included in calculating the GDP for the United States. If a country is not specified, assume the action is performed in the United States. a. GM's assembly and sale of cars in Mexico b. resale of used textbooks to college students c. sale of wheat to Mrs. Baird's Bakery d. Honda's assembly and sale of cars in the U.S. e. Ocean Spray purchases plastic to make bottles f. Old Navy purchases mannequins to display clothes

a. Not included in U.S. GDP b. Not included in U.S. GDP c. Not included in U.S. GDP d. Included in U.S. GDP e. Not included in U.S. GDP f. Not included in U.S. GDP

Determine which economic feature is described by the statements. a. A _____occurs as the result of a significant decline in national output. b. If such a decline goes on for an especially long time, the period will be considered a _______. c. A ____ is the highest point before output decline, whereas the lowest point during the decline is known as a business or economic _______.

a. Recession b. Depression c. Peak / Trough

Categorize each item below as a component of Gross Domestic Product (GDP): consumption, investment, government purchases, or net exports. a. A ticket to a local sporting event. b. A 55-cent taco c. A public school teacher's salary d. A dollhouse sold abroad e. A domestically manufactured business computer f. A domestically manufactured personal computer g. Ice cream h. Cab fare for personal use

a. consumption b. consumption c. government purchases d. net exports e. investments f. consumption g. consumption h. consumption

Which of the following are examples of the investment component of GDP? a. Floatin' Away Kayak Co. buys equipment to use in its factory.This ___ an example of investment spending. b. The government purchases new military equipment.This ____ an example of investment spending. c. All the Econs Consulting charges a foreign client $50,000 for services it has already provided.This _____ an example of investment spending. d. Underfoot Sneaker Co. stores shoes that are produced in the current time period but not sold in inventory.This ___ an example of investment spending. e. Tanya buys a computer for personal use.This _____ an example of investment spending.

a. is b. is not c. is not d. is e. is not

Considering just the U.S., how are GDP and GNP related? a. GDP = GNP + (output of U.S. citizens living abroad) - (output of foreign nationals living in the U.S.) b. GDP = GNP - (output of U.S. citizens living abroad) + (output of foreign nationals living in the U.S.) c. GDP = GNP - (output of U.S. citizens living abroad) - (output of foreign nationals living in the U.S.) d. GDP = GNP + (output of U.S. citizens living abroad) + (output of foreign nationals living in the U.S.)

b. GDP = GNP - (output of U.S. citizens living abroad) + (output of foreign nationals living in the U.S.)

For a good or service to be counted in a given year's gross domestic product (GDP), what four criteria must be met? a. have a market value, be an intermediate or final good or service, be produced within a given country, and be produced within a certain time frame b. have a market value, be a final good or service, be produced within a given country, and be produced within a certain time frame c. have a market value, be a final good or service, be produced within a given country, and be produced independent of any set time frame d. have a market value, be a final good or service, be produced within a given country or in another country with whom they have established trade relations, and be produced within a certain time frame

b. have a market value, be a final good or service, be produced within a given country, and be produced within a certain time frame