Chapter 5 Apply it

The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs.

Firms, labor and capital

The gross domestic product (GDP) of the United States is defined -- as the all --- -- in a given period of time.

The gross domestic product (GDP) of the United States is defined market value of as the all final goods and services produced within the United States in a given period of time. Based on this definition, indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in 2023. Screenshot attached

Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all transactions and production for that nation. Which of the following scenarios are either not accounted for or measured inaccurately by either the income or the expenditure methods of calculating GDP for the United States?

The loss of enjoyment people incur when scenic land is converted to commercial use The value of babysitting services, when the babysitter is paid in cash and the transaction isn't reported to the government The leisure time enjoyed by households When a U.S. company purchases and imports wood from Brazil to use to build new houses within the United States, this purchase increases the investment component of GDP while also decreasing net exports by the same amount. Therefore, the purchase of wood from Brazil causes no overall change in US GDP.