Save this PDF as:

Size: px
Start display at page:

## Transcription

3 Personal consumption expenditures Net foreign factor income earned Transfer payments Rents Consumption of fixed capital (depreciation) Social security contributions Interest Proprietors income Net exports Dividends Compensation of employees Indirect business taxes Undistributed corporate profits Personal taxes Corporate income taxes Corporate profits Government purchases Net private domestic investment Personal saving \$ a. Using the above data, determine GDP and NDP by both the expenditure and income methods. b. Now determine NI: first, by making the required additions and subtractions from GDP; and second, by adding up the types of income which comprise NI. c. Adjust NI from (b) as required to obtain PI. d. Adjust PI from part c as required to obtain DI. (a) GDP = \$388, NDP = \$362; (b) NI = \$399; (c) PI = \$291; (d) DI = \$ Using the following national income accounting data, compute (a) GDP, (b) NDP, (c) NI. All figures are in billions. Compensation of employees U.S. exports of goods and services Consumption of fixed capital Government purchases of goods and services Indirect business taxes Net private domestic investment Transfer payments U.S. imports of goods and services Personal taxes Net foreign factor income earned in U.S. Personal consumption expenditures \$

4 (a) Personal consumption expenditures (C) \$219.1 Government purchases (G) 59.4 Gross private domestic investment (I g ) 63.9 ( ) Net exports (X n ) ( ) 1.3 Gross domestic product (GDP) \$343.7 (b) Consumption of fixed capital Net domestic product (NDP) \$331.9 (c) Net foreign factor income earned in U.S Indirect business taxes National income (NI) \$ Why do national income accountants compare the market value of the total outputs in various years rather than actual physical volumes of production? What problem is posed by any comparison over time of the market values of various total outputs? How is this problem resolved? If it is impossible to summarize oranges and apples as one statistic, as the saying goes, it is surely even more impossible to add oranges and, say, computers. If the production of oranges increases by 100 percent and that of computers by 10 percent, it does not make any sense to add the 100 percent to the 10 percent, then divide by 2 to get the average and say total production has increased by 55 percent. Since oranges and computers have different values, the quantities of each commodity are multiplied by their values or prices. Adding together all the results of the price times quantity figures leads to the aggregate figure showing the total value of all the final goods and services produced in the economy. Thus, to return to oranges and computers, if the value of orange production increases by 100 percent from \$100 million to \$200 million, while that of computers increases 10 percent from \$2 billion to \$2.2 billion, we can see that total production has increased from \$2.1 billion (= \$100 million + \$2 billion) to \$2.4 billion (= \$200 million + \$2.2 billion). This is an increase of percent [= (\$2.4 billion - \$2.1 billion)/\$2.1 billion)] and not the 55 percent incorrectly derived earlier. Comparing market values over time has the disadvantage that prices change. If the market value in year 2 is 10 percent greater than in year 1, we cannot say the economy s production has increased 10 percent. It depends on what has been happening to prices; on whether the economy has been experiencing inflation or deflation. To resolve this problem, statisticians deflate (in the case of inflation) or inflate (in the case of deflation) the value figures for the total output so that only real changes in production are recorded. To do this, each item is assigned a weight corresponding to its relative importance in the economy. Housing, for example, is given a high weight because of its importance in the average budget. A book of matches would be given a very low weight. Thus, the price of housing increasing by 5 percent has a much greater effect on the price index used to compare prices from one year to the next, than would the price of a book of matches increasing by 100 percent (Key Question) Suppose that in 1984 the total output in a single-good economy was 7,000 buckets of chicken. Also suppose that in 1984 each bucket of chicken was priced at \$10. Finally, assume that in 1992 the price per bucket of chicken was \$16 and that 22,000 buckets were purchased. Determine the GDP price index for 1984, using 1992 as the base year. By what percentage did 86

5 the price level, as measured by this index, rise between 1984 and 1992? Use the two methods listed in Table 7-6 to determine real GDP for 1984 and X/100 = \$10/\$16 =.625 or 62.5 when put in percentage or index form (.625 x 100) =.60 or 60% (Easily calculated = =.6 = 60% ) Method 1: 1992 = (22,000 x \$16) 1.0 = \$352, = (\$7,000 x \$10).625 = \$112,000 Method 2: 1992 = 22,000 x \$16 = \$352, = 7,000 x \$16 = \$112, (Key Question) The following table shows nominal GDP and an appropriate price index for a group of selected years. Compute real GDP. Indicate in each calculation whether you are inflating or deflating the nominal GDP data. Year Normal GDP, Billions Price index ( ) Real GDP billions \$ Values for real GDP, top to bottom of the column: \$2,376.7 (inflating); \$3,467.1 (inflating); \$4,761.3 (inflating); \$5,911.9 (inflating); \$8,516 (deflating) Which of the following are actually included in this year s GDP? Explain your answer in each case. a. Interest on an AT&T bond b. Social security payments received by a retired factory worker c. The services of a painter in painting the family home d. The income of a dentist e. The money received by Smith when she sells her economics textbook to a book buyer f. The monthly allowance a college student receives from home g. Rent received on a two-bedroom apartment h. The money received by Mac when he resells his current-year model Plymouth Prowler to Stan i. Interest received on corporate bonds j. A 2-hour decline in the length of the workweek k. The purchase of an AT&T bond l. A \$2 billion increase in business inventories m. The purchase of 100 shares of GM common stock n. The purchase of an insurance policy 87

6 (a) Included. Income received by the bondholder for the services derived by the corporation for the loan of money. (b) Excluded. A transfer payment from taxpayers for which no service is rendered (in this year). (c) Excluded. Not a market transaction. If any payment is made, it will be within the family. (d) Included. Payment for a final service. You cannot pass on a tooth extraction! (e) Excluded. Secondhand sales are not counted; the textbook is counted only when sold for the first time. (f) Excluded. A private transfer payment; simply a transfer of income from one private individual to another for which no transaction in the market occurs. (g) Included. Payment for the final service of housing. (h) Excluded. The production of the car had already been counted at the time of the initial sale. (i) Included. The income received by the bondholders is paid by the corporations for the current use of the money capital (the loan). (j) Excluded. The effect of the decline will be counted, but the change in the work week itself is not the production of a final good or service or a payment for work done. (k) Excluded. A non-investment transaction; it is merely the transfer of ownership of financial assets. (If AT&T uses the money from the sale of a new bond to carry out an investment in real physical assets, that will be counted.) (l) Included. The increase in inventories could only occur as a result of increased production. (m) Excluded. Merely the transfer of ownership of existing financial assets. (n) Included. Insurance is a final service. If bought by a household, it will be shown as consumption; if bought by a business, as investment as a cost added to its real investment in physical capital (Last Word) What government agency compiles the U.S. GDP accounts? In what U.S. Department is it located? Of the several sources of information, name one source for each of the four components of GDP: consumption, investment, government purchases and net exports. The Bureau of Economic Analysis (BEA) in the Department of Commerce compiles GDP statistics. The Census Bureau provides survey data for consumption, investment, and government purchases. Consumption figures also come from industry trade sources as does some investment data. The U.S. Office of Personnel Management also provides data on government spending on services. Net export figures come from the U.S. Customs Service and BEA surveys on service exports and imports. 88

### Chapter 24 Measuring Domestic Output and National Income QUESTIONS. 1. In what ways are national income statistics useful? LO1

Chapter 24 Measuring Domestic Output and National Income QUESTIONS 1. In what ways are national income statistics useful? LO1 Answer: National income accounting does for the economy as a whole what private

### CHAPTER 5: MEASURING GDP AND ECONOMIC GROWTH

CHAPTER 5: MEASURING GDP AND ECONOMIC GROWTH Learning Goals for this Chapter: To know what we mean by GDP and to use the circular flow model to explain why GDP equals aggregate expenditure and aggregate

### Unit 4: Measuring GDP and Prices

Unit 4: Measuring GDP and Prices ECO 120 Global Macroeconomics 1 1.1 Reading Reading Module 10 - pages 106-110 Module 11 1.2 Goals Goals Specific Goals: Understand how to measure a country s output. Learn

### CHAPTER 7 Measuring Domestic Output, National Income, and the Price Level

CHAPTER 7 Measuring Domestic Output, National Income, and the Price Level Topic Question numbers 1. GDP concept 1-15 2. C, I, G, and X n components 16-43 3. Investment and the capital stock 44-57 4. GDP

### CHAPTER 20 GROSS DOMESTIC PRODUCT ACCOUNTING

CHAPTER 20 GROSS DOMESTIC PRODUCT ACCOUNTING Chapter in a Nutshell Gross domestic product was introduced in the previous chapter as a basic measure of macroeconomic performance. This chapter identifies

### Chapter 5: National Income Accounting John Petroff

Chapter 5: National Income Accounting John Petroff INTRODUCTION The purpose of this topic is to study how the gross national product is measuring the economic activity of a nation. The concept is defined

### Pre-Test Chapter 6 ed17 2

Pre-Test Chapter 6 ed17 2 Multiple Choice Questions 1. (Last Word) The U.S. government agency responsible for compiling the national income accounts is the: A. Census Bureau. B. Bureau of Labor Statistics

### This is the on-line Multiple Choice Quiz for Chapter 4. Please do the following. Go to the special codes section on your score sheet

Instructions: This is the on-line Multiple Choice Quiz for Chapter 4. Please do the following. Step I - Go to the special codes section on your score sheet Write your section number (1, or 4, or 5) under

### 31. Gross Domestic Product equals a. Y = C + I G + NX. b. Y = C I + G + NX. c. Y = C + I + G + NX.

GDP Review Questions 13. Gross Domestic Product measures the a. quantity of the goods and services produced in a given year, listed item by item, within a country. b. income of the business sector within

### MEASURING GDP AND ECONOMIC GROWTH CHAPTER

MEASURING GDP AND ECONOMIC GROWTH CHAPTER Objectives After studying this chapter, you will able to Define GDP and use the circular flow model to explain why GDP equals aggregate expenditure and aggregate

### 11.1 Estimating Gross Domestic Product (GDP) Objectives

11.1 Estimating Gross Domestic Product (GDP) Objectives Describe what the gross domestic product measures. Learn two ways to calculate the gross domestic product, and explain why they are equivalent. 11.1

### Chapter 24. What will you learn in this chapter? Valuing an economy. Measuring the Wealth of Nations

Chapter 24 Measuring the Wealth of Nations 2014 by McGraw-Hill Education 1 What will you learn in this chapter? How to calculate gross domestic product (GDP). Why each component of GDP is important. What

### Macroeconomics Instructor: Jen Dinsmore Hanson Homework Assignment Chapter 9. Multiple Choice Questions

Macroeconomics Instructor: Jen Dinsmore Hanson Homework Assignment Chapter 9 Multiple Choice Questions 1. Net domestic product is usually preferred to GDP by economists because net national product A.

### MEASURING GDP AND ECONOMIC GROWTH*

Chapter 5 MEASURING GDP AND ECONOMIC GROWTH* Gross Domestic Product Topic: GDP 1) Gross domestic product is the total produced within a country in a given time period. A) market value of all final and

### Measuring National Output and National Income

Measuring National Output and National Income 6 C H A P T E R O U T L I N E Gross Domestic Product Final Goods and Services Exclusion of Used Goods and Paper Transactions Exclusion of Output Produced Abroad

### Measuring the Aggregate Economy

CHAPTER 25 Measuring the Aggregate Economy The government is very keen on amassing statistics... They collect them, add them, raise them to the n th power, take the cube root and prepare wonderful diagrams.

### Name: Date: 3. Which of the following is a flow variable? A) wealth B) the number unemployed C) government debt D) income

Name: Date: 1. GDP is all of the following except the total: A) expenditure of everyone in the economy. B) income of everyone in the economy. C) expenditure on the economy's output of goods and services.

### 6. Real GDP means the value of goods and services is measured in prices. A) current B) actual C) constant D) average

Name: Date: 1. Assume that total output consists of 4 apples and 6 oranges and that apples cost \$1 each and oranges cost \$0.50 each. In this case, the value of GDP is: A) 10 pieces of fruit. B) \$7. C)

### Supplement Unit 3. Gross Domestic Product (GDP): What Is It and How Is It Measured?

1 Supplement Unit 3. Gross Domestic Product (GDP): What Is It and How Is It Measured? Gross Domestic Product (GDP) is the market value of all final user goods and services produced domestically during

Chapter 2 The Measurement and Structure of the National Economy Chapter Outline National Income Accounting: The Measurement of Production, Income, and Expenditure Gross Domestic Product Saving and Wealth

### Chapter Outline. Chapter 2. National Income Accounting. National Income Accounting

Chapter 2 The Measurement and Structure of the National Economy Chapter Outline National Income Accounting: The Measurement of Production, Income, and Expenditure Real GDP, Price Indexes, and Inflation

### ECONOMIC GROWTH* Chapter. Key Concepts

Chapter 5 MEASURING GDP AND ECONOMIC GROWTH* Key Concepts Gross Domestic Product Gross domestic product, GDP, is the market value of all the final goods and services produced within in a country in a given

### Measuring a Nation s Income

Measuring a Nation s Income I. Review of the Definitions of Microeconomics and Macroeconomics A. Definition of microeconomics: the study of how households and firms make decisions and how they interact

### Lesson 3 - National Income Accounting

Lesson 3 - National Income Accounting Acknowledgement: Ed Sexton and Kerry Webb were the primary authors of the material contained in this lesson. Section 1 - National Income Accounting History of National

### Chapter 8. GDP : Measuring Total Production and Income

Chapter 8. GDP : Measuring Total Production and Income Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics Related Economic Terms Macroeconomics:

### Big Concepts. Measuring U.S. GDP. The Expenditure Approach. Economics 202 Principles Of Macroeconomics

Lecture 6 Economics 202 Principles Of Macroeconomics Measuring GDP Professor Yamin Ahmad Real GDP and the Price Level Economic Growth and Welfare Big Concepts Ways to Measure GDP Expenditure Approach Income

### Measuring a Nation s Income THE MEASUREMENT OF GROSS DOMESTIC PRODUCT. In this chapter, look for the answers to these questions:

In this chapter, look for the answers to these questions: What is Gross Domestic Product (GDP)? 5 How is GDP related to a nation s total income and spending? What are the components of GDP? How is GDP

### Chapter 11: Activity

Economics for Managers by Paul Farnham Chapter 11: Measuring Macroeconomic Activity 11.1 Measuring Gross Domestic Product (GDP) GDP: the market value of all currently yproduced final goods and services

### Tracking the Macroeconomy

chapter 7(23) Tracking the Macroeconomy Chapter Objectives Students will learn in this chapter: How economists use aggregate measures to track the performance of the economy. What gross domestic product,

### 7. Which of the following is a flow variable? A) wealth B) the number unemployed C) government debt D) income

Name: Date: 1. GDP is all of the following except the total: A) expenditure of everyone in the economy. B) income of everyone in the economy. C) expenditure on the economy's output of goods and services.

### Macroeconomics Instructor Miller GDP Practice Problems

Macroeconomics Instructor Miller GDP Practice Problems 1. Gross domestic product in the economy is measured by the A) total number of goods and services produced in the economy. B) dollar value of all

### Reference: Gregory Mankiw s Principles of Macroeconomics, 2 nd edition, Chapters 10 and 11. Gross Domestic Product

Macroeconomics Topic 1: Define and calculate GDP. Understand the difference between real and nominal variables (e.g., GDP, wages, interest rates) and know how to construct a price index. Reference: Gregory

### NATIONAL INCOME AND PRODUCT ACCOUNTING MEASURING THE MACROECONOMY

NATIONAL INCOME AND PRODUCT ACCOUNTING MEASURING THE MACROECONOMY 1. NIPA: GNP and GDP 2. Saving and Wealth 3. Prices and Inflation 4. Unemployment 5. Problems with Measuring the Macroeconomy There are

### 4. In the G of the GDP formula why do we not count Welfare and Social Security payments?

DUE DATE: NAME: ECONOMIC HEALTH INDICATORS: GDP AND CPI WORKSHEET CHAPTER 11 USE THE ATTACHED NOTES OR THE POWERPOINTS TO ANSWER THE FOLLOWING QUESTIONS.!!!KEEP THE ATTACHED NOTES. DO NOT TURN IN THE NOTES!!!!

### Why expenditure = income. The Circular Flow. Circular flow. Gross Domestic Product

Gross Domestic Product Why expenditure = income Two definitions: 1. Total expenditure on final goods and services 2. Total income earned by factors of production In In every transaction, the the buyer

### Solutions to Week 3 Tutorial Questions (Ch2)

Chapter 2: Q1: Macroeconomics P.51 Review Questions #1 Q2: Macroeconomics P.51 Review Questions #5 Q3: Macroeconomics P.52 Numerical Problems #5 Q4: Macroeconomics P.52 Numerical Problems #6 Q5: Macroeconomics

### Households Wages, profit, interest, rent = \$750. Factor markets. Wages, profit, interest, rent = \$750

KrugmanMacro_SM_Ch07.qxp 11/9/05 4:47 PM Page 87 Tracking the Macroeconomy 1. Below is a simplified circular-flow diagram for the economy of Micronia. a. What is the value of GDP in Micronia? b. What is

### Macroeconomics: GDP, GDP Deflator, CPI, & Inflation

HOSP 2207 (Economics) Learning Centre Macroeconomics: GDP, GDP Deflator, CPI, & Inflation Macroeconomics is the big picture view of an economy. Microeconomics looks at the market for a specific good, like

### National Income Accounting. Courtesy : www. carlprosper4nugs.yolasite.com

National Income Accounting Courtesy : www. Introduction to Economy of Ghana Measuring the Economy - National Income Accounting Structure of the Economy and Sectoral Outlook Economic History of Ghana: preindependence,

### GDP: Measuring Total Production and Income

Chapter 7 (19) GDP: Measuring Total Production and Income Chapter Summary While microeconomics is the study of how households and firms make choices, how they interact in markets, and how the government

### Economics 212 Principles of Macroeconomics Study Guide. David L. Kelly

Economics 212 Principles of Macroeconomics Study Guide David L. Kelly Department of Economics University of Miami Box 248126 Coral Gables, FL 33134 dkelly@miami.edu First Version: Spring, 2006 Current

### 1. A glimpse of the real sector: GDP, inflation rate, macroeconomic identities

1. A glimpse of the real sector: GDP, inflation rate, macroeconomic identities 1. Real sector and financial sector Macroeconomics studies the aggregate effects of what people do. Most of what people do

### Finance, Saving, and Investment

23 Finance, Saving, and Investment Learning Objectives The flows of funds through financial markets and the financial institutions Borrowing and lending decisions in financial markets Effects of government

### two part macroeconomic activity and fiscal policy

Macro Ch 04 7/16/03 12:20 PM Page 107 part two macroeconomic activity and fiscal policy chapters 4. Australia s national and international accounts 5. The macroeconomic environment 6. The aggregate expenditures

### Measuring Economic Performance. Chapter 2

Measuring Economic Performance Chapter 2 Outline Gross Domestic Product Measuring GDP Through Spending Measuring GDP Through Production Measuring GDP Through Income Saving and Investment Transactions with

### INTRODUCTION TO MACROECONOMICS MIDTERM- SAMPLE QUESTIONS

INTRODUCTION TO MACROECONOMICS MIDTERM- SAMPLE QUESTIONS MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In May 2009, Ford Motor Company's sales

### Economic Output. Economic Output. GDP: Definition. GDP: Definition. GDP: Definition. GDP: Definition. Agenda. Gross Domestic Product (GDP)

Economic Output Economic Output Agenda Defining GDP Measuring Real GDP The Expenditure Side The Income Side Economic Output Gross Domestic Product (GDP) The official measure of a country s economic output.

### An Introduction to Macromeasurement

An Introduction to Macromeasurement There are three kinds of economics: Greek-letter, up-and-down, and airport." Paul Krugman, The Age of Diminished Expectations Circular flow model The economy is an incredibly

### Exam 1 Review. 3. A severe recession is called a(n): A) depression. B) deflation. C) exogenous event. D) market-clearing assumption.

Exam 1 Review 1. Macroeconomics does not try to answer the question of: A) why do some countries experience rapid growth. B) what is the rate of return on education. C) why do some countries have high

### Objectives for Chapter 15: Explanations of Business Investment Spending. At the end of Chapter 15, you will be able to answer the following questions:

1 Objectives for Chapter 15: Explanations of Business Investment Spending At the end of Chapter 15, you will be able to answer the following questions: 1. Define "gross private investment spending". 2.

### MEASURING A NATION S INCOME

10 MEASURING A NATION S INCOME WHAT S NEW IN THE FIFTH EDITION: There is more clarification on the GDP deflator. The Case Study on Who Wins at the Olympics? is now an FYI box. LEARNING OBJECTIVES: By the

### Cosumnes River College Principles of Macroeconomics Problem Set 3 Due September 17, 2015

Cosumnes River College Principles of Macroeconomics Problem Set 3 Due September 17, 2015 Name: Solutions Fall 2015 Prof. Dowell Instructions: Write the answers clearly and concisely on these sheets in

### The Circular Flow 1/15/2013. Gross Domestic Product: Expenditure and Income

IN THIS CHAPTER, YOU WILL LEARN: ECON 3010 Intermediate Macroeconomics Chapter 2 The Data of Macroeconomics the meaning and measurement of the most important macroeconomic statistics: gross domestic product

### The Data of Macroeconomics

CHAPTER 2 The Data of Macroeconomics Modified for ECON 2204 by Bob Murphy 2016 Worth Publishers, all rights reserved IN THIS CHAPTER, YOU WILL LEARN:... the meaning and measurement of the most important

### At the end of Chapter 10, you will be able to answer the following:

1 Objectives for Chapter 10 The Circular Flow Model At the end of Chapter 10, you will be able to answer the following: 1. Explain the basic circular flow model. 2. Define "consumption" and "saving" 3.

### Gross Domestic Product. Will the Canadian economy weaken through the next year and shrink, or will it remain strong and expand?

Will the Canadian economy weaken through the next year and shrink, or will it remain strong and expand? To assess the state of the economy and to make big decisions about business expansion, firms use

### GDP M A C R O E C O N O M I C S

GDP M A C R O E C O N O M I C S Gross Domestic Product GDP The market value of all final goods and services produced within a country during a given period of time. Breaking down the definition: 1. Market

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Suvey of Macroeconomics, MBA 641 Fall 2006, Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Modern macroeconomics emerged from

### UNIT I NATIONAL INCOME AND MACROECONOMICS

UNIT I NATIONAL INCOME AND MACROECONOMICS 1 National Income National Income is defined as the sum total of all the goods and services produced in a country, in a particular period of time. Normally this

### Chapter 12. National Income Accounting and the Balance of Payments. Slides prepared by Thomas Bishop

Chapter 12 National Income Accounting and the Balance of Payments Slides prepared by Thomas Bishop Preview National income accounts measures of national income measures of value of production measures

### 1. GDP includes only sales of good and services to the final pur- Final goods. Newly produced goods

1 Output is normally measured by Gross Domestic Product (GDP), defined as the total market value of all final goods and services produced within an economy in a given period. Output is normally measured

### Name (Please print) Assigned Seat. ECO202: PRINCIPLES OF MACROECONOMICS FIRST MIDTERM EXAM SPRING 2011 Prof. Bill Even FORM 1.

Name (Please print) Assigned Seat ECO202: PRINCIPLES OF MACROECONOMICS FIRST MIDTERM EXAM SPRING 2011 Prof. Bill Even FORM 1 Directions 1. Fill in your scantron with your unique id and form number. Doing

### UNIT 6 NATIONAL INCOME POINTS TO REMEMBER

UNIT 6 NATIONAL INCOME POINTS TO REMEMBER Good : In economics a good is defined as any physical object, natural or man-made, that could command a price in the market. Consumption Goods : Those goods which

### National Income Accounting

Chapter 2 The Measurement and Structure of the Canadian Economy Economics 282 University of Alberta National Income Accounting The national income accounts is an accounting framework used in measuring

### Wages Coconuts 200 Fish 100 Consumption Coconuts 200 Fish 100

Chapter 2 Numerical 1 Professor Gilligan Production Coconuts 1000 Fish 500 Gilligan wages Fish 100 Stored coconuts Fertilizer 100 Price 2 coconuts per fish Wages Fish 100 Consumption Fish 100 GDP= Value

### Practice Problems on NIPA and Key Prices

Practice Problems on NIPA and Key Prices 1- What are the three approaches to measuring economic activity? Why do they give the same answer? The three approaches to national income accounting are the product

### Summer 2014 Week 3 Tutorial Questions (Ch2) Solutions

Chapter 2: Q1: Macroeconomics P.52 Numerical Problems #3 Q2: Macroeconomics P.52 Numerical Problems #6 Q3: Macroeconomics P.53 Numerical Problems #7 Q4: Macroeconomics P.53 Numerical Problems #9 Q5: Macroeconomics

### Macroeconomics Instructor Miller Aggregate Expenditure Practice Problems

Macroeconomics Instructor Miller Aggregate Expenditure Practice Problems 1. The aggregate expenditure model focuses on the relationship between real spending and. A) short-run; real GDP B) short-run; inflation

### Chapter 15: Spending, Income and GDP

Chapter 15: Spending, Income and GDP By the end of this chapter, you will be able to: Define GDP Calculate GDP by: adding up value added of production. adding up expenditure. adding up income. Distinguish

### Chapter 20. The Measurement of National Income. In this chapter you will learn to. National Output and Value Added

Chapter 20 The Measurement of National Income In this chapter you will learn to 1. Use the concept of value added to solve the problem of double counting when measuring national income. 2. Describe the

### Macroeconomia Capitolo 7. Seguire l andamento della macroeconomia. What you will learn in this chapter:

Macroeconomia Capitolo 7 Seguire l andamento della macroeconomia PowerPoint Slides by Can Erbil 2006 Worth Publishers, all rights reserved What you will learn in this chapter: How economists use aggregate

### Macroeconomics, 10e, Global Edition (Parkin) Chapter 24 Finance, Saving, and Investment. 1 Financial Institutions and Financial Markets

Macroeconomics, 10e, Global Edition (Parkin) Chapter 24 Finance, Saving, and Investment 1 Financial Institutions and Financial Markets 1) The term "capital," as used in macroeconomics, refers to A) the

### Economics 152 Solution to Sample Midterm 1

Economics 152 Solution to Sample Midterm 1 N. Das PART 1 (81 POINTS):Answer the following 27 multiple choice questions on the scan sheet. Each question is worth 3 points). 1. Gross domestic product (GDP)

### Chapter 5: GDP and Economic Growth

Chapter 5: GDP and Economic Growth Be Mean Green! Please consider the environment before printing this Chapter Outline. It ll be available online throughout the semester. For Firms private accounting measures

### Chapter 6: Measuring National Output and Income

Week 2 Presenter: Jan 25, 2012 Table of Contents 1 Calculating GDP 2 3 Questions Calculating GDP What is the definition of GDP?(2011Mid1 M11; 2011Mid1 M13) What would be included in GDP? intermediate goods?

### 25 May Nigerian Gross Domestic Product Report (Expenditure and Income approach) Q3, Q4 2015

25 May 2016 Nigerian Gross Domestic Product Report (Expenditure and Income approach) Q3, Q4 2015 PREFACE This publication provides data on Quarterly Gross Domestic Product (GDP) by the EXPENDITURE and

### Lecture 3: National Income Accounting Reference - Chapter 5. 3) The Income Approach

Lecture 3: National Income Accounting Reference - Chapter 5 3) The Income Approach The income approach defines GDP in terms of the income derived or created from producing final goods and services. Net

### Economics 152 Solution to Sample Midterm 2

Economics 152 Solution to Sample Midterm 2 N. Das PART 1 (84 POINTS): Answer the following 28 multiple choice questions on the scan sheet. Each question is worth 3 points. 1. If Congress passes legislation

### EC201 Intermediate Macroeconomics. EC201 Intermediate Macroeconomics Problem Set 1 Solution

EC201 Intermediate Macroeconomics EC201 Intermediate Macroeconomics Problem Set 1 Solution 1) Given the difference between Gross Domestic Product and Gross National Product for a given economy: a) Provide

### ECON 101 Exam 2. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question.

Name: Class: Date: ECON 101 Exam 2 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Al s Aluminum Company sells \$1 million worth of aluminum to Shiny Foil

### Chapter 2 The Measurement and Structure of the National Economy

Chapter 2 The Measurement and Structure of the National Economy Multiple Choice Questions 1. The three approaches to measuring economic activity are the (a) cost, income, and expenditure approaches. (b)

### Chapter 5 Measuring Economic Activity: GDP and Unemployment

Chapter 5 Measuring Economic Activity: GDP and Unemployment Overview This chapter looks in detail at how economists measure two major macroeconomic variables: gross domestic product (GDP) and the unemployment

### Workshop 7 Monetary and Fiscal Policy

Workshop 7 Monetary and Fiscal Policy Description The government uses monetary and fiscal policy to manage the economy. Monetary policy and fiscal policy are tools to increase or decrease aggregate demand

### Problem Set for Chapter 10(Multiple choices)

Problem Set for Chapter 10(Multiple choices) 1. Because every transaction has a buyer and a seller, a. GDP is more closely associated with an economy s income than it is with an economy s expenditure.

### CHAPTER 7 CONCEPT OF NATIONAL INCOME

CHAPTER 7 CONCEPT OF NATIONAL INCOME 171 172 NATIONAL INCOME s CIRCULAR FLOW The concept of circular flow of national income involves two principles. In every economic exchange, the seller receives exactly

### 7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Chapter. Aggregate Supply

Chapter 7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Aggregate Supply Topic: Aggregate Supply/Aggregate Demand Model 1) The aggregate supply/aggregate demand model is used to help understand all of the following

### The level of price and inflation Real GDP: the values of goods and services measured using a constant set of prices

Chapter 2: Key Macroeconomics Variables ECON2 (Spring 20) 2 & 4.3.20 (Tutorial ) National income accounting Gross domestic product (GDP): The market value of all final goods and services produced within

### 12/03/2012. Currencies and Exchange Rates

The Canadian dollar is one of 100s of different monies. The three big monies: the U.S. dollar, yen, and euro. In February 2007, one Canadian dollar bought 85 U.S. cents. By November 2007, the Canadian

### Principles of Macroeconomics Prof. Yamin Ahmad ECON 202 Fall 2004

Principles of Macroeconomics Prof. Yamin Ahmad ECON 202 Fall 2004 Sample Final Exam Name Id # Part B Instructions: Please answer in the space provided and circle your answer on the question paper as well.

### A. GDP, Economic Growth, and Business Cycles

ECON 3023 Hany Fahmy FAll, 2009 Lecture Note: Introduction and Basic Concepts A. GDP, Economic Growth, and Business Cycles A.1. Gross Domestic Product (GDP) de nition and measurement The Gross Domestic

### International Finance

International Finance CHAPTER34 C H A P T E R C H E C K L I S T When you have completed your study of this chapter, you will be able to 1 Describe a country s balance of payments accounts and explain what

### THE ECONOMY AT FULL EMPLOYMENT: THE CLASSICAL MODEL*

Chapter 8 THE ECONOMY AT FULL EMPLOYMENT: THE CLASSICAL MODEL* The Classical Model: A Preview Topic: Real Variables 1) Real variables A) are those that determine the cost of living. B) are those that determine

### National Income in India, Concept and Measurement. General Economics

National Income in India, Concept and Measurement General Economics National Income National income is the money value of all the final goods and services produced by a country during a period of one year.

### CENTURY 21 ACCOUNTING, 8e General Journal Key Terms and Definitions

CENTURY 21 ACCOUNTING, 8e General Journal Key Terms and Definitions Chapter 1 Starting A Proprietorship: Changes that Affect the Accounting Equation account: a record summarizing all the information pertaining

### A country s economy is in a short-run equilibrium with an output level less than the full-employment output level. Assume an upwardsloping aggregate

ADAS Practice A country s economy is in a short-run equilibrium with an output level less than the full-employment output level. Assume an upwardsloping aggregate supply curve. (a) Using a correctly labeled

### Chapter 4 Measuring GDP and Economic Growth

Chapter 4 Measuring GDP and Economic Growth 1 Gross Domestic Product 1) Gross domestic product is the total produced within a country in a given time period. A) market value of all final and intermediate

### Chapter 29 Aggregate Demand and Aggregate Supply QUESTIONS

Chapter 29 Aggregate Demand and Aggregate Supply QUESTIONS 1. Why is the aggregate demand curve downsloping? Specify how your explanation differs from the explanation for the downsloping demand curve for

### [03.03] Guidelines for the User Cost Method to calculate rents for owner occupied housing. International Comparison Program

International Comparison Program [03.03] Guidelines for the User Cost Method to calculate rents for owner occupied housing Global Office 3 rd Technical Advisory Group Meeting June 10-11, 2010 Paris, France