ECON 2301- CH 21

An economy produces only fun and food. The table shows the prices and the quantities of fun and food produced in 2020 and 2021. The base year is 2020. Calculate nominal GDP in 2020 and 2021. Quantity Price Fun 43 ​$2 Food 62 ​$4 Fun 44 ​$4 Food 65 ​$8

43 x 2 = 86 62 x 4= 248 (86 + 248 = 334 <-- Nominal GDP 2020) 44 x 4 = 176 65 x 8 = 520 (176 + 520= 696 <-- Nominal GDP 2021)

The table shows some data for an economy. If the base year is​ 2019, calculate the​ economy's nominal GDP and real GDP in 2020. Nominal GDP in 2020 is $ Real GDP in 2020 is $

600 135

What is a good that is used as a component of a final​ good? Is the value of intermediate goods included in the measure of​ GDP? ​_______ good is used as a component of a final good. We​ _______ add the value of intermediate goods produced to the value of final goods to measure GDP.

An​ intermediate; do not

Which of the following is an example of an intermediate good or service​?

Samsung buys compressors for manufacturing refrigerators.

Mitsubishi Heavy Industries makes the wings of the new Boeing 787 Dreamliner in Japan. Toyota assembles cars for the U.S. market in Kentucky. Where do these activities appear in the National Income and Product Accounts of​ Japan?

The value of the wings appear as Japanese exports in the expenditure approach to measuring​ Japan's GDP and​ Japan's GNP.

Which of the following is included in the measure of U.S.​ GDP?

a Hershey's Kiss PRODUCED and SOLD in the United States.

Net taxes are taxes paid minus​ _____.

cash benefits received from governments

Monthly report The Commerce Department reported that in​ May, 2019, retail sales rose by 0.2​ percent, net exports​ decreased, inventories held by businesses rose by 0.3​ percent, and total sales by businesses rose by 1.5 percent. ​Source: Commerce​ Department, July 2019 What is the effect of the fall in net exports on​ GDP? The fall in net exports __________.

decreases GSP

What is U.S. gross domestic​ product? U.S. gross domestic product is the market value of all the​ _______ produced​ _______ in a given time period.

final goods and​ services; within the United States

Gross domestic product ​(GDP​) is the market value of all the​ _____ goods and services produced​ _____ a country in a given time period.

final; within

The business cycle is a​ _____ but​ _____ up-and-down movement of total​ _____ and other measures of economic activity.

​periodic; irregular; production

The table shows some of the items in a country's National Income and Product Accounts in 2018. What was GDP as measured by the income approach in 2018​? What was net domestic product at factor cost in 2018​? Using the income​ approach, GDP in 2018 was $________ trillion. Consumption expenditure 8.2 Government expenditure 2.2 Indirect taxes less subsidies 0.8 Depreciation 1.4 Net factor income from abroad 0 Investment 1.9 Net exports −0.6 Statistical discrepancy 0.1

$11.6 $?? for the other question w. different #'s answer was $14.3; $11.6

The figure shows the flows of income and expenditure in an economy. In 2007​, Q was ​$1,000 ​billion, U was ​$250 ​billion, W was ​$650 ​billion, R was ​$250 ​billion, and Z was ​$80 billion. Calculate investment and saving.

$20- investment $100- saving (look at notebook to solve)

The figure shows the flows of expenditure and income in an economy. In​ 2013, U was ​$1.0 ​trillion, V was ​$1.0 ​trillion, W was ​$6.0 ​trillion, J was ​$2.5 ​trillion, and Z was −$1 trillion. Calculate total​ income, net​ taxes, and GDP.

$8.5 total income-- keep in mind the negative $1 trillion in 'Z' (1 + 6 + 2.5 - 1 = 8.5) $1.5 net taxes (1+ 6 +? = 8.5) $8.5 GDP (same as total income)

In 2014​, U.S. exports of goods and services are ​$2,335 billion and imports of goods and services are ​$2,899 billion. What is the value of net​ exports? The value of net exports in 2014 is ______ billion dollars.

-564 (NEGATIVE SIGN)

The table shows an​ economy's total production and the prices of the final goods it produced in 2020 and 2021. The base year is 2020. Calculate real GDP in 2020 and real GDP in 2021. Quantity Price Fish 100 ​$3 Berries 40 ​$4 Fish 75 ​$5 Berries 65 ​$8 Real GDP in 2020 is $______ Real GDP in 2021 is $______

100 x 3 = 300 40 x 4 = 160 (+300) = 460<-- Real GDP 2020 75 x 3 = 225 65 x 4 = 260 (+225) = 485 <-- Real GDP 2021

An island economy produces only melons and kiwi fruits. The table gives the quantities produced and prices in 2018 and 2019. If the base year is​ 2019, use the​ chained-dollar method to calculate real GDP in 2018 and 2019. In terms of what dollars is each of these two real GDPs​ measured? Real GDP in 2019 using the​ chained-dollar method is Real GDP in 2018 using the​ chained-dollar method is Real GDP in 2018 and real GDP in 2019 are measured in

107 x 13 = 1391 69 x 13 = 552 (1943) 1568 (Real GDP) = 1943 / 1.239 (25.7 + 22.1 + 23.9) in 2019

The table shows some of the items in a country's National Income and Product Accounts in 2018. Use the expenditure approach to calculate GDP in 2018. Consumption expenditure 8.2 Government expenditure 2.2 Indirect taxes less subsidies 0.8 Depreciation 1.4 Net factor income from abroad 0 Investment 1.9 Net exports −0.6 Statistical discrepancy 0.1

11.7 (Y= C+I+G +NX)

The table shows some data for an economy. If the base year is​ 2019, calculate the​ economy's nominal GDP and real GDP in 2020. Quantity Price Apples 60 ​$0.50 Oranges 80 ​$0.25 Apples 160 ​$1.00 Oranges 220 ​$2.00 Nominal GDP in 2020 is $_____ Real GDP in 2020 is $______

160 x 1.00 = 160 220 x 2.00 = 440 (160 + 440 = 600 <-- Nominal GDP 2020) 160 x 0.50 = 80 220 x 0.25 = 55 (80+55 = 135 <-- Real GDP 2020)

In 2011​, U.S. exports of goods and services are ​$2,094 billion and imports of goods and services are ​$2,662 billion. What is the value of net​ exports? The value of net exports in 2011 is _____ billion dollars.

2,094- 2,662= -568

An economy produces only fun and food. The table shows the prices and the quantities of fun and food produced in 2020 and 2021. The base year is 2020. Calculate the percentage increase in real GDP in 2021. Quantity Price Fun 43 ​$4 Food 65 ​$6 Fun 44 ​$6 Food 70 ​$9 The percentage increase in real GDP in 2021 is

44 x 4=176 70 x 6= 420 176 + 420 = 596% (turn into decimal, and then round = 6.0) <--Real GDP 2021

The figure shows the flows of expenditure and income on Lotus Island. In​ 2016, R was ​$6 ​billion; W was ​$37 ​billion; U was ​$12 ​billion; J was ​$19 ​billion; and Z was ​$7 billion. Calculate total expenditure and total income.

75--> (37 + 12 + 19 + 7 = 75) YOU DO NOT INCLUDE THE 'R' 75

The table shows some data for an economy which produces only herbal teas and hot chocolate. The base year is 2018. Calculate real GDP in 2018 and real GDP in 2019 using the​ chained-dollar method. Real GDP in 2018 using the​ chained-dollar method is Real GDP in 2019 using the​ chained-dollar method is

92 x 4 = 368 53 x 7 = 371 (+368) = 739 739/ ?= 873

An island economy produces only melons and kiwi fruits. The table gives the quantities produced and prices in 2018 and 2019. The base year is 2018. Use the​ chained-dollar method to calculate real GDP in 2018 and 2019. In terms of what dollars is each of these two real GDPs​ measured? Real GDP in 2018 using the​ chained-dollar method is $ Real GDP in 2019 using the​ chained-dollar method is $ Real GDP in 2018 and real GDP in 2019 are measured in

92x 7 = 644 54 x 9 = 486 (+644) = 1130 <- Real GDP 2018 113 x 7 = 791 65 x 9 =585 (+791) = 1376 <- Real GDP 2019 MEASURED IN 2018

The table gives data on the economy of Iberia. Calculate​ Iberia's GDP. Net Taxes 12 Government expenditure on goods and services 24 Saving 14 consumption expenditure 68 Investment 24 exports of goods & services 25

94 (Y= C+S +NT) 94=68+14+12)

Classify each of the following items as a final good or service or an intermediate good or​ service, and identify which is a component of consumption​ expenditure, investment, or government expenditure on goods and services. A. A computer purchased for a senator's office B. Steel sheets bought by General Motors C. A DVD bought by a household D. New airplanes bought by United Airlines.

A is a final good that is government expenditure​, B is an intermediate good​, C is a final good that is consumption expenditure​, D is a final good that is investment.

The table shows some of the items in a country's National Income and Product Accounts in 2018. Calculate the country's GNP and the country's national income in 2018. GNP in 2018 is $______ trillion. Consumption expenditure 8.2 Government expenditure 2.2 Indirect taxes less subsidies 0.8 Depreciation 1.4 Net factor income from abroad 0 Investment 1.9 Net exports −0.6 Statistical discrepancy 0.1

GNP= GDP + NFI (Net Factor Income) 11.7= (8.2+ 2.2+ 1.9 -0.6) + 0 National Income= GNP - Depreciation - Statistical Discrepancy 10.2 = 11.7 - 1.4 - 0.1

The figure shows the flows of income and expenditure in an economy. In 2007​, Q was ​$1,300 ​billion, U was ​$200 ​billion, W was ​$500 billion, R was ​$150 ​billion, and Z was ​$80 billion. Calculate investment and saving.

Investment is ​$520 billion. Saving is ​$650 billion.

The table shows some of the items in​ Northland's National Income and Product Accounts in 2019. Calculate​ Northland's net domestic product at factor cost in 2019. Consumption expenditure 885 Wages 815 Government expenditure 350 Interest, rent, profit 400 Indirect taxes less subsidies 165 Depreciation 200 Investment 300 Net exports 35 ​Northland's net domestic product at factor cost in 2019 is $_______ billion.

Net Domestic Income= Wages + Interest, rent, & profit 1,215= 815 + 400

An economy produces only fun and food. The table shows the prices and the quantities of fun and food produced in 2020 and 2021. The base year is 2020. Calculate nominal GDP in 2020 and 2021. Quantity Price Fun 45 ​$1 Food 57 ​$5 Fun 46 ​$2 Food 62 ​$10

Nominal GDP in 2020 is $330 Nominal GDP in 2021 is $712

The table gives data on the economy of Iberia. Calculate​ Iberia's imports of goods and services. Net taxes 10 Government expenditure on goods and services 19 Saving 19 Consumption expenditure 67 Investment 21 Exports of goods and services 26 ​Iberia's imports of goods and services equal $ _____.

Step 1: GDP = Expenditure; Y = C+S+NT (67 + 19+10) = 96 Step 2: Y= (C+I+G+X) -.M; (67+21+19+26) - 96 =37

The figure shows the flows of expenditure and income on Lotus Island. In​ 2016, R was ​$14 ​billion; W was ​$32 ​billion; U was ​$14 ​billion; J was ​$20 ​billion; and Z was ​$4 billion. Calculate total expenditure and total income.

Total expenditure is ​$70 billion. Total income is ​$70 billion.

U.S. economy in first quarter of 2019 GDP increased at an annual rate of 4.6 percent in the first quarter of 2019. Government expenditure grew at 7​ percent, but consumption expenditure grew at a rate of 6.7 percent. Investment and exports shrank. ​Source: BEA, July​ 26, 2019 Use the figure to indicate the flows in which the items in the news clip occur. How can GDP increase at a rate of 4.6 percent if consumption expenditure increased at a rate of 6.7​ percent? In the​ figure, _______. It is possible for GDP to increase by only 4.6 percent when consumption expenditure grew at a 6.7 percent rate because​ _______.

U is government expenditure on goods and services and J is investment the sum of investment and net exports grew at a negative rate

The table shows some of the items in a country's National Income and Product Accounts in 2019. Use the expenditure approach to calculate GDP in 2019. GDP in 2019 using the expenditure approach is $______ trillion. Consumption expenditure 7.7 Government expenditure 2.0 Indirect taxes less subsidies 0.7 Depreciation 1.3 Net factor income from abroad 0.1 Investment 1.7 Net exports −0.5 Statistical discrepancy 0

Y= C+I+G+NX 10.9= 7.7+1.7+2- 0.5

Classify each of the following items as a final good or an intermediate​ good, and identify whether it is a component of consumption​ expenditure, investment, or government expenditure on goods and​ services: Item 1. New airplanes bought by United Airlines. Item 2. New battle ship bought by the U.S. navy. Item 3. Packing boxes bought by Amazon.com. Item 4. Starbuck's grande mocha frappuccino bought by a student. Item 1 is​ _______ and item 2 is​ _______. Item 3 is​ _______ and item 4 is​ _______.

a final good that is investment; a final good that is government expenditure. an intermediate good; a final good that is consumption expenditure.

Classify each of the following items as a final good or an intermediate​ good, and classify the expenditure on each final good as consumption expenditure or​ investment: Item 1. A new bridge across the creek in the Augusta National Golf Club Item 2. Cardboard boxes bought by Amazon.com Item 3. A DVD bought by a household. Item 4. Trucks bought by Fedex. Item 1 is​ _______ and item 2 is​ _______. Item 3 is​ _______ and item 4 is​ _______.

a final good that is investment; an intermediate good. a final good that is consumption expenditure; a final good that is investment.

Expansion remains slow The Commerce Department reported that retail sales increased 1.3 percent in June. Net exports were up 0.8 percent in the first quarter and inventories held by businesses rose by 0.3 percent in June. Total sales by businesses rose 0.3 percent. ​Source: Commerce​ Department, 2013 What is the effect of the rise in net exports on​ GDP? The rise in net exports ______________.

increases GDP

How is total expenditure in the United States​ calculated? Total expenditure in the United States is equal to consumption expenditure plus investment​ _______.

plus government expenditure on goods and services plus net exports

Which of the following is an example of government expenditure on goods and​ services?

secret service protection for the President The purchase of wireless service for the House of Representatives

What is gross national​ product? Gross national product is​ _______.

the market value of all the final goods and services produced anywhere in the world in a given time period by the factors of production supplied by the residents of that country

Which of the following is an example of​ investment?

the purchase of a new assembly line by Ford. a firm adding unsold output to inventory