Homework 3
In 2011, the value of the GDP deflator is _______
115
The following table gives nominal and real GDP for an economy for two years. Based on the table, in Year 2, the value of the GDP deflator is ________ The inflation rate between Year 1 and Year 2 is _______%
116.7 6.1%
In 2012, the value of the GDP deflator is ________
119
Which span of years saw the largest percentage increase in the price level, as measured by change in the GDP deflator?
2017 to 2018
Indicate which component of GDP will be affected by each of the following transactions involving General Motors. a. You purchase a new Chevrolet Silverado pickup from a GM dealer. b. You purchase a 2017 (preowned) Chevrolet Silverado from a friend c. GM purchases door handles for the Silverado from an auto parts manufacturer in Indiana d. GM produces 1,000 Silverados in a factory in Flint, Michigan, and ships them to a car dealer in Shanghai, China e. GM purchases new machine tools to use in its Flint factory. f. The state of Michigan builds a new highway to help improve access to GM's Flint plant.
Consumption Expenditure, Not included in GDP calculation, Not included in GDP calculation, Net Export Expenditure, Investment Expenditure, Government Expenditure
What are the four major categories of expenditure?
Consumption, investment, government purchases, and net exports.
In the circular flow of expenditure and income, why must the total value of production in an economy equal the total value of income?
Every penny spent on a good or service must end up as someone's income
Which of the following do we subtract from GDP to obtain national income?
depreciation
The circular-flow diagram shows that all sources of income are owned by
households
What is value added and how is it calculated? Value added refers to
the additional market value a firm gives to a product and is calculated as the difference between the sale price and the price of intermediate goods.
Gross Domestic Product (GDP) is
the market value of all final goods and services produced in a country during a period of time.
The circular-flow diagram shows that ________ should equal ________.
total expenditure; total income
What are the four major components of expenditures in GDP?
Consumption, Investment, Government Purchases, and Net Exports
Suppose that a simple economy produces only the following four goods and services: shoes, hamburgers, shirts, and cotton. Further, assume that all of the cotton is used in the production of shirts. Use the information in the following table to calculate Nominal Gross Domestic Product (Nominal GDP) for 2021. Product - Shoes: Quantity: 100, Price: $60.00 - Hamburgers: Quantity: 100, Price: $2.00 - Shirts: Quantity: 50, Price: $25.00 - Cotton: Quantity: 1,800, Price: 0.60 The Nominal GDP for the year 2021 is ___________
$7450
Use the data in the following table to calculate the GDP deflator for each year (values are in billions of dollars, enter your response rounded to two decimal places -- remember to multiply by 100). Year Nominal GDP Real GDP - 2014: $17,527 $16,912 - 2015: $18,238 $17,432 - 2016: $18,745 $17,731 - 2017: $19,543 $18,144 - 2018: $20,612 $18,688
GDP Deflator: (normal GDP/real GDP x 100) - 2014: 103.64 - 2015: 104.62 - 2016: 105.72 - 2017: 107.71 - 2018: 110.30
Indicate whether each of the following transactions represents the purchase of a final good 1. The purchase of tires from Bridgestone tire company by an automobile manufacturer. 2. The purchase of an aircraft carrier by the federal government. 3. The purchase of French wine by a U.S. consumer. 4. The purchase of a new plane by American Airlines
Is not the purchase of a final good, Is the purchase of a final good, Is the purchase of a final good, Is the purchase of a final good
The following table illustrates the value added approach to calculating GDP. Please complete the table.
L.L.Bean = 20 Total Value Added = 35
What are the four categories of income?
Wages, Interest, Rent, and Profit.
Which equation represents the relationship between GDP and the four major expenditure components?
Y = C + I + G + NX