Macro

Consider the information about the economy of Pakistan. Note that the currency of Pakistan is the rupee. The government purchases: 2.80 trillions of rupees. Individuals consume: 11.90 trillions of rupees. Individuals save: 5.19 trillions of rupees. Businesses invest: 1.60 trillions of rupees. Foreigners spend: 0.52 trillions of rupees to purchase Pakistani firms. Pakistan imports: 2.48 trillions of rupees. Pakistan exports: 1.20 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.

15.02=11.90+1.60+2.80+(1.20−2.48)

Question 1 of 20 Gross domestic product is the market value of all: finished goods and services produced within a country in a year. goods and services produced within a country in a year. finished goods and services produced by a country's permanent residents, wherever located, in a year. goods and services sold within a country in a year.

finished goods and services produced within a country in a year.

GDP in the United States was $14,119 billion in 2014, and grew to $14,660.4 billion in 2015. This represents an annual growth rate of: 3.8%. 3.7%. 1.04%. $541.4 billion.

A

Which of the following would be included in GDP for the United States? Toyota, a Japanese car company, producing cars in the United States a tire manufacturer making and selling tires to Ford to be used in their new cars Jane's purchase of a used car after her old car is destroyed in an accident a U.S. professor taking a year off to teach at the London School of Economics

Toyota

The difference between a finished good and an intermediate good is that: finished goods are not counted as part of GDP. an intermediate good is sold for use as a component in a finished good. a finished good is sold for use as a component of an intermediate good. intermediate goods are of lower quality than finished goods.

B

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

B,A

Table: Prices and Quantities in a 4-Good Economy) Refer to the table. Suppose an economy produces only the four goods listed. What is the GDP in this country? A table with 3 columns and 4 rows. The column headers read Product, Price, and Quantity. The data are as follows. Row 1: Product, Shovels; Price, 20 dollars; Quantity, 50. Row 2: Product, Books; Price, 50 dollars; Quantity, 100. Row 3: Product, Tomatoes; Price, 1 dollar; Quantity, 500. Row 4: Product, Pizzas; Price, 10 dollars; Quantity, 120. $6,200 $6,700 $7,700 $7,200

C

Which of the following is counted as part of GDP? The government sends a Social Security check to a retiree. People in a country are healthy and happy. A state government hires workers to repave the streets. Bob mows his lawn.

C

Table: Three-Good Economy I) Suppose an economy produces only the three finished goods shown in the table. The table gives information on the quantities produced and the prices of goods sold in 2008 and 2009. If prices in 2008 are used to calculate real GDP, what is the real GDP in 2009? A table with 5 columns and 3 rows. The column headers read: Product, Quantity (2008), Price (2008), Quantity (2009), and Price (2009). The data are as follows. Row 1: Product, Computers; Quantity (2008), 25; Price (2008), 800 dollars; Quantity (2009), 30; Price (2009), 1,000.00 dollars. Row 2: Product, Pizzas; Quantity (2008), 90; Price (2008), 9 dollars; Quantity (2009), 100; Price (2009), 10 dollars. Row 3: Product, Burgers; Quantity (2008), 180; Price (2008), 1.80 dollars; Quantity (2009), 200; Price (2009), 2.00 dollars. $31,400 $20,134 $25,260 $21,134

C price 2018 x Q2019

Table: Three-Good Economy I) Suppose an economy produces only the three finished goods shown in the table. The table gives information on the quantities produced and price of goods sold in 2008 and 2009. What is the nominal GDP in 2009? A table with 5 columns and 3 rows. The column headers read: Product, Quantity (2008), Price (2008), Quantity (2009), and Price (2009). The data are as follows. Row 1: Product, Computers; Quantity (2008), 25; Price (2008), 800 dollars; Quantity (2009), 30; Price (2009), 1,000.00 dollars. Row 2: Product, Pizzas; Quantity (2008), 90; Price (2008), 9 dollars; Quantity (2009), 100; Price (2009), 10 dollars. Row 3: Product, Burgers; Quantity (2008), 180; Price (2008), 1.80 dollars; Quantity (2009), 200; Price (2009), 2.00 dollars. $26,260 $21,134 $20,134 $31,400

D

The single best indicator of a recession is: falling prices. increasing unemployment. negative nominal GDP growth. negative real GDP growth.

D

Calculate the annual growth rate of nominal GDP in the following examples. Round your answers to the nearest tenth of a percent. Nominal GDP in 1930: $97 billion. Nominal GDP in 1931: $84 billion. Annual growth rate: % Nominal GDP in 1931: $84 billion. Nominal GDP in 1932: $68 billion. Annual growth rate: % Nominal GDP in 2000: $9,744 billion. Nominal GDP in 2001: $10,151 billion. Annual growth rate: %

1930 to 1931 nominal GDP growth rate: $84 billion−$97 billion$97 billion=−0.134=−13.4%. 1931 to 1932 nominal GDP growth rate: $68 billion−$84 billion$84 billion=−0.190=−19.0%. 2000 to 2001 nominal GDP growth rate: $10,151 billion−$9744 billion$9744 billion=0.042=4.2%. = 4.2

An economy has $10 trillion in consumption, $2.5 trillion in investment, $3 trillion in government purchases, $1 trillion in exports, and $1.5 trillion in imports. What is GDP in this economy? $15 trillion $18 trillion $15.5 trillion $16.5 trillion

A

If a country produced nothing but 20 smartphones and 10 Blu-ray players in 2017, priced at $100 per smartphone and $200 per Blu-ray player, its GDP in 2017 would be: $4,000. $2,000. $1,000. $5,000.

A

Table: Economic Data) Based on the data in the table, what is the GDP for this economy based on the factor income approach? A table with 2 columns and 9 rows shows the different components of GDP. The headers read: Component of GDP and Amount. The data are as follows. Row 1: Consumption, 875.5 dollars; Row 2: Investment, 415.5 dollars; Row 3: Wages and salaries, 794.8 dollars; Row 4: Rent, 300.2 dollars; Row 5: Profit, 391 dollars; Row 6: Government purchases, 380 dollars; Row 7: Interest, 345 dollars; Row 8: Exports, 520 dollars; and Row 9: Imports, 360 dollars. $1,831 $1,486 $1,901.5 $2,246.5

A

Table: Economic Data) Based on the data in the table, what is the GDP for this economy, based on the national spending approach? A table with 2 columns and 9 rows shows the different components of GDP. The headers read: Component of GDP and Amount. The data are as follows. Row 1: Consumption, 875.5 dollars; Row 2: Investment, 415.5 dollars; Row 3: Wages and salaries, 794.8 dollars; Row 4: Rent, 300.2 dollars; Row 5: Profit, 391 dollars; Row 6: Government purchases, 380 dollars; Row 7: Interest, 345 dollars; Row 8: Exports, 520 dollars; and Row 9: Imports, 360 dollars. $1,831 $2,191 $2,120.5 $2,551

A

The value of volunteer services is: not included in GDP, but should be because a service is produced. not included in GDP and should not be because nothing tangible is produced. included in GDP, but should not be because nothing tangible is produced. included in GDP and should be because a service is produced.

A

To compare levels of production from different years, the appropriate measure to use is: real GDP. nominal GDP. the GDP deflator. GDP - GNP.

A

20. a. U.S. GDP is approximately $18 trillion and the U.S. population is approximately 320 million. If GDP were divided equally among the US population what would each person get? Even split: $ per person If you and your nine best friends took almost all U.S. GDP for yourself but gave $3,000 per person to everyone else, how much would you get each year, just for yourself? Uneven split: $ for just you. b. More seriously, there are currently about 229,000 U.S. taxpayers who earn more than $1.5 million per year. If you could take their money and divide it up equally among the U.S. population of 320 million other Americans, how much money could you give each person? Note that $1.5 million is the cutoff. On average this group earns about $4.4 million per year, so use that number in your calculations. Redistributed funds: $ per perso

Approximately $56,250, US GDP per capita. $18 trillion320 million=$18×1012320×106=$56,250 $ 18 trillion 320 million = $ 18 × 10 12 320 × 10 6 = $ 56 , 250 If you gave $3,000 to each of 320 million people, that would cost you $3,000×320 million= $ 3 , 000 × 320 million = $960 billion, call it $1 trillion. US GDP is $18 trillion, so that would leave you and your 9 friends with a little less than $1.7 trillion each! b. 229,000×$4.4million= 229 , 000 × $ 4.4 million = $1,007,600,000,000 (about $1 trillion). Dividing $1 trillion by 320 million, we have $3,125.

According to the national spending approach, which of the following is counted in investment? a college graduate buys a new car after graduating a restaurant buys a new wood-fired oven for baking pizzas a retiree buys newly issued U.S. government bonds a student pays for tuition at a university

B

The value of a car produced and sold in 2000 and sold again to a second owner in 2008 would be included in GDP for: both 2000 and 2008. 2000 only. either 2000 or 2008, but not both. 2008 only.

B

GDP: is usually higher than national wealth. is a measure of national wealth. measures production in a year, while national wealth measures a stock of assets. measures the stock of assets, while national wealth measures production in a year.

C

In 2010, real GDP was $13.2 trillion and nominal GDP was $14.6 trillion. What was the GDP deflator for that year? 90.4 140 192.7 110.6

D

The difference between nominal GDP and real GDP is that nominal GDP: is measured in terms of numbers of goods and services produced, whereas real GDP is measured in dollar terms. measures the total value of only finished goods and services, whereas real GDP measures the value of all goods and services, both intermediate and finished. measures a country's production of finished goods and services at fixed prices, whereas real GDP measures a country's production of all finished goods and services at current market prices. measures a country's production of finished goods and services at current market prices, whereas real GDP measures a country's production of finished goods and services at the same prices in all years.

D

GDP and the Measurement of Progress: End of Chapter Problem 16. We noted that "government purchases" don't include all government spending. A big part of what the U.S. government does is transfer money from one person to another. Social Security (payments to retirees), and Medicare and Medicaid (paying for medical care for the elderly and the poor) make up most of these "government transfers." We'll look into this in more detail in the chapter on the Federal Budget, but right now, let's see how big "government transfers" are and how fast they've grown in the federal government's budget. The figures in this table are all in noninflation-adjusted dollars. Year Total Federal Transfers Total Federal Spending 1950 $10.3 Billion $47 Billion 2016 $1,961 Billion $4,023 Billion What percentage of the federal budget do transfers make up in these two years? Round your answer to the nearest tenth of a percent. Transfers as a percent of federal spending, 1950: % Transfers as a percent of federal spending, 2016: % Calculate the percent increase of federal transfer spending and overall federal spending from 1950 to 2016. Round your answers to the nearest percent. Percent increase in federal transfer spending, 1950 to 2016: % Percent increase in federal spending, 1950 to 2016: %

Transfers as percent of spending in 1950: 21.9% Transfers as percent of spending in 2016: 48.7% Growth in transfers: 18,938% Growth in federal spending: 8459%

GDP and the Masurement of progress: End of Chapter Problem 17. Let's figure out GDP for Robinson Crusoe. a. Initially he is stuck on an island without the wisdom and local knowledge of Friday. Because Crusoe is a proper Englishman, he wants to keep his accounts. This year, he catches and eats 2,000 fish valued at one British pound (£) each, grows and eats 4,000 coconuts valued at £0.5 each, and makes 2 huts (housing) valued at £200 each. If government purchases are zero and there is no trade, what is C for Crusoe? What is I? What is Y? C = £ I = £ Y = £ b. One year, he learns of a tribe on a nearby island who are willing to trade with him: If he gives fish, they give clams. He produces just as much as before, but he trades 500 of the 2,000 fish and receives 10,000 clams valued at 5 clams per British pound. What is the British pound value of the exported fish? Of the imported clams? Value of exported fish = £ Value of imported clams = £ What are C, I, and NX now? What is GDP now? C = £ I = £ NX = £ GDP = £

a. 𝐶=(2,000×£1)+(4,000×£0.5)=£2000+£2000=£4000 𝐼=£200×2=£400 Y = C + I = £4,000 + £400 = £4400. b. The fish are worth 500 x £1 = £500. The clams are worth 10,000÷5= £2,000. Crusoe does not consume the 500 fish he exports, so he consumers 1500 fish valued at £1 each, rather than 2000 fish. C = fish + coconuts + clams = £1,500 + £2,000 + £2,000 = £5,500. Investment spending does not change, so I = £400. 𝑁𝑋=𝑋−𝑀=£500−£2,000=−£1,500 . 𝐺𝐷𝑃=𝐶+𝐼+𝐺+𝑁𝑋=£5,500+£400+£0−£1500=£4400