PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Chapter 12, Problem 2RQ
To determine
Describe the effects of recession in profit gains.
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You are a junior executive of a new cellular phone carrier called Technologies of the Future (TOF) that competes in the same market as Verizon Wireless, AT&T, and T-Mobile. You are asked to write a professional document that discusses the concepts below. Define Gross Domestic Product (GDP). Differentiate between Real GDP and Nominal GDP. Explain how the GDP of the U.S. may influence the sale of smartphones by TOF. What percentage of the GDP is attributed to the sale of cellular phones (including carrier services) in the United States? Define the Human Development Index (HDI). Explain if the HDI has an influence on the sale of smartphones in the U.S. Which aspect of the HDI might influence the sale of smartphones? Identify the target audience for the sale of smartphones in the U.S..
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Household spending by all UK households amounted to over £500 billion in 1997, or 63% of gross domestic product. This level of expenditure is very closely related to conditions in the country's macro-economic environment. For marketers, it is crucial to be able to read the macro-economic environment and to predict the effects of change in demand for their goods and services. Identifying turning points in the economic cycle has become a work of art as well as science, as consumers frequently confound experts by changing their expenditure levels in a way which could not have been predicted on the basis of past experience. During the Autumn of 1998, mortgage rates in the UK were falling; unemployment was close to its lowest level for two decades; pay rises were keeping ahead of inflation; and share prices were recovering from their recent falls. Yet expenditure by British households was falling sharply. For three consecutive months retail sales fell in value, with retailers such as Marks…
A futures market trades contracts on the growth rate for nominal GDP. The contract pays $X to the
buyer, where X is 100 times the growth rate in nominal GDP from last year to this year. For
example, if nominal GDP grows by 1% over last year, the contract pays $100 (1 x 100).
Nominal GDP last year was $28,909 billion. Contracts on the futures markets are currently selling
for $513. What is the market's prediction for nominal GDP this year?
Put your answer in billions. You may round to two decimal places.
Chapter 12 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
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