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- (Nominal GDP) Which of the following is a necessary condition —something that must occur—for nominal GDP to rise? Explain your answers. a. Actual production must increase. b. The price level must increase. c. Real GDP must increase. d. Both the price level and actual production must increase. e. Either the price level or real GDP must increase11. Differentiate between nominal and real GDP. (Nominal , Real ) GDP is the actual measured GDP in terms of current year dollars or prices existing at the time the output was produced. CNominal, Real) GDP reflects the value of GDP after it has been corrected for price changes compared to the price level in a reference year (called the base year). A GDP price index is calculated each year to measure the level of prices relative to the level of prices in the base year. This price index is then expressed as a percentage of the base year price level6. Limitations of GDP 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? Check all that apply. The costs of overfishing and other overly intensive uses of resources O Federal government paychecks to soldiers 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 component of GDP while also net exports by the same amount. Therefore, the purchase of wood in US GDP. from Brazil causes
- 6. Limitations of GDP 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? Check all that apply. The costs of overfishing and other overly intensive uses of resources Expenditures on federal highways The variety of goods available to consumers The value produced by doing your own laundry 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 component of GDP while also net exports by the same amount. Therefore, the purchase of wood in US GDP. from Brazil causes2. Activities included (and not included) in the calculation of GDP The gross domestic product (GDP) of the United States is defined as the all 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 2020. 2020 GDP Included Excluded Scenario An accountant starts a client's 2020 tax return on April 14, 2021, finishing it just before midnight on April 15, 2021. Treetopplers, a U.S. lumber company, produces wood at a plant in Oregon on September 25, 2020. It sells the wood to Buildit and Partners, a developer, for use in the production of a new house that will be built in the United States in 2020. (Note: Focus exclusively on whether production of the wood increases GDP directly, and ignore the effect of production of the new house on GDP.) Fastlane, a Japanese automobile company, produces a sedan at a plant in Indiana on December 14, 2020. A family buys the sedan on…6. Limitations of GDP 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? Check all that apply. The quality of goods available to consumers O 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 O Federal government paychecks to soldiers When a U.S. company purchases and imports automotive parts from Canada to use to build cars within the United States, this purchase increases the net exports by the same amount. Therefore, the purchase component of GDP while also in US GDP. automotive parts from Canada causes
- 2. Activities included (and not included) in the calculation of GDP The gross domestic product (GDP) of the United States is defined as the all 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 2020. Scenario Billy Bonka's, a German chocolate company, produces a chocolate bar at a plant in Pennsylvania on December 1, 2020. A high schooler buys the chocolate bar on December 28. Gamewear, a U.S. electronics company, produces a VR headset at a plant in South Korea on March 20, 2020. Gamewear imports the VR headset into the United States on May 25, 2020. Rotato, a U.S. tire company, produces a set of tires at a plant in Michigan on September 10, 2020. It sells the set of tires to Speedmaster for use in the production of a two-door coupe that will be made in the United States in 2020. (Note: Focus exclusively on whether production of the set of tires increases GDP…6. Limitations of GDP 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? Check all that apply. The quality of goods available to consumers The loss of enjoyment people incur when scenic land is converted to commercial use Federal government paychecks to soldiers The import and sale of illegal drugs from South America When a U.S. company purchases and imports electronic parts from China to use to produce smartphones within the United States, this purchase increases the component of GDP while also increasing net exports by the same amount. Therefore, the in US GDP. investment purchase of electronic parts from China causes no overall change2. Limitations of GDP 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? Check all that apply. The components of an MP3 player that are produced in China The value produced by doing your own laundry Funds spent by city governments to renovate their buildings The costs of overfishing and other overly intensive uses of resources The leisure time enjoyed by Americans
- 3. Limitations of GDP 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? Check all that apply. The quality of goods available to consumers The loss of enjoyment people incur when scenic land is converted to commercial use The value produced when you wash your own car at home O Federal government paychecks to soldiers When a U.S. company purchases and imports electronic parts from China to use to produce smartphones within the United States, this purchase increases the component of GDP while also net exports by the same amount. Therefore, the purchase of electronic parts from China causes in US GDP.2. Activities included (and not included) in the calculation ofGDP The gross domestic product (GDP) of the United States is defined as the all 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 2020. 2020 GDP Scenario Included Excluded Sofaland, a Swedish furniture company, produces a table at a plant in Virginia on December 5, 2020. It sells the table to a college student on December 24. You chop down a cherry tree on your property in California and make a dining room table in 2020. A similar table sells for $800 in a local furniture store. Zippycar, a U.S. automobile company, produces a convertible at a manufacturing plant in Minneapolis on January 21, 2020. It sells the car at a dealership in San Francisco on February 10, 2020. Athleticus, a U.S. shoe company, produces a pair of sneakers at a plant in Vietnam on March 10, 2020. Athleticus imports the pair…6. Limitations of GDP 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? Check all that apply. Expenditures on federal highways The value of babysitting services, when the babysitter is paid in cash and the transaction isn't reported to the government The quality of goods available to consumers The loss of enjoyment people incur when scenic land is converted to commercial use 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 component of GDP while also net exports by the same amount. Therefore, the purchase of wood from Brazil causes in US GDP.