5. Comparing total expenditures and total productionThe following graph shows total production (TP) and total expenditures (TE) for a hypothetical economy. Suppose Real GDP is $450 billion.TOTAL EXPENDITURE (Bons of dollars)475450425400325350325300300325350 375 400 425REAL GOP (Bons of dollars)450 475500(TP-Real GOP)TE 500425400X375350350375 400 425 450 475 500TOTAL EXPENDITURE (Billions of dollars)475450325300300325REAL GDP (Bons of dollars)If Real GDP is $450 billion, inventories(TP- Real GDP)TE, the firms iproduction, and Real GDP

Gross domestic product is the summation of a country's final goods and services. A rise in GDP means…

8. Comparing total expenditures and total production The following graph shows total production (TP) and total expenditures (TE) for a hypothetical economy. Suppose Real GDP is $450 billion. TOTAL EXPENDITURE (Bons of dollars) 500 475 X 37 400 425 REAL GOP (ons of dollars) 450 425 400 375 350 321 300 300 (TP-Real GOP) 325 350 TE 450 475 500

8. Comparing total expenditures and total production The following graph shows total production (TP) and total expenditures (TE) for a hypothetical economy. Suppose Real GDP is $450 billion. TOTAL EXPENDITURE (Bons of dollars) 500 475 X 37 400 425 REAL GOP (ons of dollars) 450 425 400 375 350 321 300 300 (TP-Real GOP) 325 350 TE 450 475 500

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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What is total expenditure in an economy? Total expenditure is equal to expenditure ______. A. on goods and services produced in the economy and goods imported. B. by households, firms, governments, and the rest of the world on goods and services produced in the economy. C. by firms and governments on goods and services produced in the economy
2. Which of the following is NOT included in the calculation of GDP? a) Investment spending b) Government spending
se the information in the table to answer the following questions All numbers are in billions of 2012 dollars Real GDP (Y) $10,000 $11,000 $12,000 Consumption (C) $8.500 $0,300 $10,100 $10,000 $11.700 Planned Investment (1) $1,000 $1,000 $1,000 $13,000 $14,000 The equilibrium level of GDP is $ 12000 billion. The MPC is 0.8 (enter your response to two decimal places) Suppose that not exports increase by $200 billion. Using the multiplier formula, determine the new level of GDP A $200 billion increase in net exports leads to a change in spending of spillon, so the new level of GDP will be $billion $1,000 $1,000 Government Purchases (G) $1,400 $1,400 $1,400 $1,400 $1,400 Net Exports (NX) -$500 -$500 $500 -$500 -$500
3. Categories of expenditures Dmitri and Frances Doherty live in Conshohocken, PA. Their son, Jake, owns his own plumbing business. For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (1), government purchases (G), exports (X), or imports (M). Check all that apply. Transaction Dmitri's employer assigns him to provide consulting services to an Australian firm that's opening a manufacturing facility in China. The Pennsylvania Department of Transportation, a state administration, fixes potholes along PA highway: 23, which feeds into the center of Conshohocken, Frances gets a new video camera made in the United States. Dmitri buys a sweater made in Guatemala. Jake buys a new set of tools to use in his plumbing business. с 00 I O O G O X 0 M O O 0 000 00 000 000
3. Categories of expenditures Shen and Valerie Ferrari live in Swarthmore, PA. Valerie's father, Antonio, lives in Sweden. For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M). Check all that apply. Transaction Shen's employer upgrades all of its computer systems using U.S.-made parts. Valerie gets a new video camera made in the United States. The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore. Valerie's father in Sweden orders a bottle of Vermont maple syrup from the producer's website. Shen buys a bottle of Italian wine. OOOoo 0 I 00000 G 00 000 X 00000 M OC 0 0 0 0
Identify the components of the GDP formula (expenditure approach). Explain how the current COVID-19 pandemic will affect said components and therefore affect GDP (arc the components increasing/decreasing?). Lastly, why are these components affected? Example: Think about what is happening to households and firms and how it changes their relationship for cach other. What is the government doing and do you think it will be sufficient?
Use the blue points (circle symbol) to plot the total expenditure line for this economy at an income of $500 billion, $600 billion, $700 billion, $800 billion, and $900 billion. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. (?) X 700 600 O I 600 700 800 REAL GDP (Billions of dollars) 1000 REAL EXPENDITURE (Billions of dollars) 900 800 500 400 400 500 900 1000 O TE line + Equilibrium GDP Use the black point (plus symbol) to indicate the equilibrium in this economy, that is, where total expenditure and income are equal. Note: Dashed drop lines will automatically extend to both axes. Suppose real GDP is currently $900 billion. Assuming the price level remains constant, this would mean that current output exceeds aggregate expenditure by $100 billion, which would send a signal to firms to decrease production The marginal propensity to consume (MPC) for this economy is ▼ and the oversimplified multiplier for…
20. Which of the following represents the measurement of GDP as the sum of consumption expenditures, investment, government purchases of goods and services, and net exports? a.Wealth approach b.Income approach c.Expenditure approach d.Saving approach
5. Limitations of GDP Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all transactions and production for that nation. Which of the following scenarios are either not accounted for or measured inaccurately by either the income or the expenditure methods of calculating GDP for the United States? Check all that apply. The value of babysitting services, when the babysitter is paid in cash and the transaction isn't reported to the government The costs of air and water pollution Federal government paychecks to soldiers The variety of goods available to consumers When a U.S. company purchases and imports wood from Brazil to use to build new houses within the United States, this purchase increases the component of GDP while also net exports by the same amount. Therefore, the purchase of wood from Brazil causes in US GDP.
Table 1 - Income and consumption data Disposable Income ($billion) Total Consumption ($billion) Savings ($billion) 100 90 ____ 200 150 ____ In Table, what is the saving with disposable income $200? Please show equation. Answers: A. 40 B. 150 C. 0.40 D. 50
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 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
Real GDP (dollars) 3,000 4,000 5,000 6,000 7,000 8,000 Consumption expenditure (dollars) 2,500 3,250 4,000 4,750 5,500 6,250 Investment (dollars) 500 500 500 500 500 500 Government expenditure (dollars) 500 500 500 500 500 500 In the above table, there are no taxes and no imports or exports The equilibrium level of expenditure for this economy is OA. no level because consumption expenditure is always less than real GDP B. $3,000 C. any level because investment always equals government expenditures OD. $5,000 www