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