Suppose that an economy consists of only two individuals. Trevor has $1310 available to spend on goods. He decides topurchase $130 worth of produce from Krista in the current year. No other economic activity takes place during the current year.Using this information, answer the questions.For the current year, what is the economy's income?For the current year, what is the economy's expenditure?In an economy, how are income and expenditure related?O Income is greater than expenditure24MacBook AirIn an economy, how are income and expenditure related?Income is greater than expenditure.O They are equal.Income is less than expenditure.They are unrelated.

Given information Total income available =$1310 Economy income refers to the total income or the…

Answered: Suppose that an economy consists of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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. Packing boxes bought by Amazon.com. Item 2. Starbuck's grande mocha frappuccino bought by a student. Item 3. A new limousine for the president. Item 4. New airplanes bought by United Airlines. Item 1 is and item 2 is A. an intermediate good; a final good that is consumption expenditure B. a final good that is consumption expenditure; a final good that is consumption expenditure O C. a final good that is consumption expenditure; a final good that is investment D. an intermediate good; a final good that is investment Item 3 is and item 4 is O A. an intermediate good; an intermediate good B. a final good that is government expenditure; a final good that is investment O C. an intermediate good; a final good that is investment O D. a final good that is government expenditure; an…
The following provides data for an economy in a certain year. Consumption expenditures $1,000 Imports $600 Government purchases of goods and services $700 Construction of new homes and apartments $500 Sales of existing homes and apartments $600 Exports $500 Government payments to retirees $200 Household purchases of durable goods $300 Beginning-of-year inventory $500 End-of-year inventory $600 Business fixed investment $300 Given the data, compute the investment component of GDP. $400 $800 $900 $300
Why must income and expenditure measure be equal and why might they not be equal? Please use numerical examples to illustrate.
choose the correct answer:
For each of the following transactions, determine the contribution to the current year's GDP. Explain the effects on the product, income and expenditure accounts. 1. On Jan 1, you purchase 10 notebooks at a price of $5 each. The seller produced the notebooks the previous year, and held them as inventories. 2. Someone purchases a 1921 Westmount mansion for $5,000,000. The broker's fee is 4%. 3. A new mother enters the workforce, taking a job as a baker that will pay $30,000 over the year. The mother must pay $4,000 a year for professional child-care services. 4. A car rental agency updates it fleet: it buys $100,000,000 worth of new cars from a domestic producer. It sells its old fleet to a used car dealer for $40,000,000. The dealer resells the cars to the public for $60,000,000.
Definition of GDP and explanation of why this is equal to national income [ an explanation of how expenditure approach and income approach to GDP are related ]
The figure shows the flows of expenditure and income in an economy. In 2013, U was $2.0 trillion, V was $0.5 trillion, W was $5.0 trillion, J was $1.5 trillion, and Z was - $1.5 trillion. Calculate total income, net taxes, and GDP.
In 2020, Delorse Greenlee purchased a 1892 painting by Paul Cezanne for $250 million. She also paid a 1 percent commission to the auction house that sold the painting. What was the contribution of these transactions to GDP in the year 2020? Select one: a. $2.5 million b. $252.5 million C. $25 million d. $0
2. During recessions, central banks tend to cut interest rates. You are interested in understanding the question of how interest rates affect GDP. You look in the data and see that interest rates tend to be low when GDP is low (i.e. the interest rate is pro-cyclical). Why do you think this simple correlation might give a misleading sense of the effect of changes in the interest rate on GDP? How might a model help you answer this question?
3. Suppose that an economy shows only the following activities in aspecific year:i. It costs an automobile manufacturing company €10 millionto assemble 5,000 cars. The cars are then sold to stores for€12 million.ii. The stores pay their workers an annual wage of €1 million andthen sell the cars directly to the consumers for €15 million.Please find other instances like this and correct them.a. Calculate the GDP in this economy using the productionof-final-goods approach.b. Calculate the GDP using the value-added approach. Showthe value added at each stage of production.c. Calculate the GDP using the income approach. Show thecosts incurred and profits earned.
For the following questions, refer to the following scenario: Assume there are only two goods in the economy, apples and bananas. In 2018, 1,300 apples were sold at $1.50 each and 8,500 bananas at $2 each. In 2019, the price of apples rose to $2 and the quantity rose to 2,300; the price of bananas rose to $3 and the quantity sold rose to 8,600. Calculate real GDP in 2019 using 2018 as the base year.

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