The consumer price index (CPI) is not used to convert nominal GDP to real GDP because the CPI calculation has measurement errors that are avoided in the real GDP calculation. the CPI includes prices of imports which consumers buy which are not relevant to GDP. the CPI does not track government spending, business investment or net exports. All of the answers are correct.
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The
- the CPI calculation has measurement errors that are avoided in the real GDP calculation.
- the CPI includes prices of imports which consumers buy which are not relevant to GDP.
- the CPI does not track government spending, business investment or net exports.
- All of the answers are correct.
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- GDP is a total quantification of the production of goods and services of a country in a period of time, which is generally quantified annually, in fiscal year or calendar year, which includes all local and foreign companies that operate in the interior from the country. True or falseThe consumer price index (CPI) is not used to convert nominal GDP to real GDP because the CPI calculation has measurement errors that are avoided in the real GDP calculation. the CPI includes prices of imports which consumers buy which are not relevant to GDP. the CPI does not track government spending, business investment or net exports. the CPI has many limitations and tends to underestimate the inflation rate All of the answers are correct.If the price of imported extra virgin olive oil decreases, then both the GDP deflator and the consumer price index will decrease. neither the GDP deflator nor the consumer price index will decrease. the GDP deflator will decrease, but the consumer price index will not decrease. the consumer price index will decrease, but the GDP deflator will not decrease.
- GDP can be computed as the sum of A) all sales that have taken place in an economy over a period of time. B) the total expenditures of consumers and business over a period of time. C) the total expenditures of consumption, investment, and government expenditure on goods and services over a period of time. D) the total expenditures of consumption, investment, government expenditure on goods and services, and net exports over a period of timeGDP as a measure of economic welfare fails to account for certain factors, including nonmarket transactions, the underground economy, leisure, externalities, and the quality of the goods purchased. Considering this, which of the following are included in GDP calculations? cleaning services performed by Molly Maid Corporation lawn-mowing services performed by a neighborhood child drugs sold illegally on a local street corner prescription drugs manufactured in the United States and sold at a local pharmacy a rug woven by hand in Turkey air pollution that diminishes the quality of the air you breathe toxic-waste cleanup performed by a local company car parts manufactured in the United States for a car assembled in Mexico a purchase of 1,000 shares of IBM stock monthly Social Security payment received by a retireeWhich of the following statements is false? A) The GDP deflator includes also imports. B) The CPI is a price index that covers a wide range of goods and services bought by households. C) The GDP deflator is a price index that covers all goods and services included in GDP. D) The CPI includes foreign goods.
- GDP deflator (GDP deflator for year t = nominal GDP for year t divided by the real GDP for year t) is a price index representing the overall price level in the economy. The CPI (the consumer price index) is also a price index representing the overall price level in the economy. Which of the below is best explains why they are different? The GDP deflator does not reflect the prices of exported goods and services, whereas the consumer price index does not reflect the prices of the imported goods and services. The GDP deflator reflects the prices of goods and services bought by producers, whereas the consumer price index reflects the prices of goods and services bought by consumers. The GDP deflator reflects the prices of intermediate goods and services bought by producers, whereas the consumer price index reflects the prices of goods and services bought by consumers.GDP is: a) a measure of all spending in the economy on foreign and domestic goods and services. b) the total market value of all final goods and services produced in an economy in a given year. c) the value of all output produced within an economy. d) made up of three components: consumption, investment, and government expenditureThe GDP Deflator reflects Group of answer choices the prices of all final goods and services currently produced domestically, as does the CPI. the price of a fixed basket of goods and services purchased by a typical consumer, as does the CPI. the prices of all final goods and services currently produced domestically, while the CPI reflects the price of a fixed basket of goods and services purchased by a typical consumer. the price of a fixed basket of goods and services purchased by a typical consumer, while the CPI reflects the prices of all final goods and services produced domestically.
- Survey of Economics: GDP Accounting Worksheet Place the transactions below in their appropriate categories in the GDP and calculate the overall effect on the GDP of the United States. My cost for auto repairs and inspection. ($1,000) The Moon township buys rock salt to maintain the municipality’s roads in the month of February ($2,000) An RMU student goes to study in Ireland for a total cost of ($5,000) A U.S. citizen buys a refrigerator from General Electric (A US company). ($1800) A US retailer buys a new cash register ($1500) The cost of auto parts used to repair my car ($300) My total gasoline bill for a year ($1,500) A Chinese citizen buys a U.S. government bond ($5,000) A Landscaping firm’s gasoline costs for a year ($2,500): A School district buys new uniforms for its basketball team ($1100) I invest in a fidelity mutual fund ($2,000) My total food cost for a year ($8,000) An American bank loans a German citizen ($5,000) An American buys a sewing machine to produce clothing…Which of the following are included in GDP calculations? a. Cleaning services performed by Molly Maid Corporation b. Lawn-mowing services performed by a neighborhood child c. Drugs sold illegally on a local street comer d. Prescription drugs manufactured in the United States and sold at a local pharmacy e. A rug woven by hand in Turkey f. Air pollution that diminishes the quality of the air you breathe g. Toxic-waste cleanup performed by a local company h. Car parts manufactured in the United States for a car assembled in Mexico i. A purchase of 1,000 shares of IBM stock j. Monthly Social Security payments received by a retireeIdentify whether the following items are officially included in United States GDP or GNP. The wage of a Mexican citizen who works in a farm in Texas in United States. The profit earned by a Brazilian Citizen who works in New York stock exchange in NewYork. The income earned by an American professor delivering a series of lectures in London. The value of Espresso coffee Star Bucks produces in France.
