Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 21, Problem 2.2P
To determine
To identify why the
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Are the following included in US GDP? Briefly explain your answer.
Used textbooks sold at your college bookstore
Use books sold at a garage sale
Cars made in the United States at a Toyota factory
Cars made in Germany at a General Motors factory
The price paid by an American tourist staying at a French hotel
The price paid by a German tourist staying at a New York hotel
Which of the following transactions should or should not be counted in GDP?
Answer Yes or No and briefly explain your answer. Answers without explanation will not be considered
in grading, even if they are correct.
a. You buy a pair of new cowboy boots on a trip to Texas
b. You buy a pair of vintage cowboy boots from your cousin in El Paso
c. A cat burglar sells $10,000 of stolen jewelry to a fence
d. Amazon issues $1 billion worth of new shares
e. GM purchases $100 million worth of tires from Firestone
f. A private company builds a new road in Memphis Y
g. Stay-at-home parents provide an estimated $500 million of child care services
What is the difference between the expenditure method and the value-add method for calculating GDP?
Chapter 21 Solutions
Principles of Economics (12th Edition)
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Similar questions
- 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 retireearrow_forwardList some of the reasons why economists should not consider GDP an effective measure of the standard of living in a county.arrow_forwardCan you do g,h,I,jarrow_forward
- Which of the following statements best describe how economists calculate GDP? Group of answer choices Economists at the Census bureau collect data from surveys sent to consumers, private firms and government agencies and add them up on a yearly basis. Economists at the Bureau of Economic Analysis pull together data on sales, imports, exports, government purchase and investments from various government sources every 3 months. Economists at the Bureau of Labor Statistics collect data from surveys sent to consumers, private firms and government agencies and add them up every 3 months. Economists at the Congressional Budget Office calculate GDP for a given year by adjusting the previous year’s GDP with inflation.arrow_forwardWhy do we calculate GDP using the expenditure approach?arrow_forwardlook at this (Links https://www.cbsnews.com/news/why-gdp-fails-as-a-measure-of-well-being/) article published by CBS News. Do you agree with the author's assessment that GDP fails to measure well being? Why (or why not)? Are there things that contribute to your well-being and happiness but are excluded from the calculation of GDP? Share an example and describe why it might be excluded from the GDP calculation.arrow_forward
- Suppose a group of British investors finances the construction of a plant to manufacture skateboards in St. Louis, Missouri. How will the construction of the plant affect GDP? Suppose the plant generates $100,000 in corporate profits this year. Will these profits contribute to GDP? Why or why not?arrow_forwardAll of the following are components of the expenditure approach to measuring GDP except from: Group of answer choices Ford Motor Company buying new Dell computers for use in its marketing department in Dearborn, Michigan. Car dealer in Iowa paid his monthly salary. The army buying new M1 Abram tanks. Alexis’ purchase of a meal at the Olive Garden in Atlanta.arrow_forwardList and compare the four components of the expenditure approach to calculating GDP.arrow_forward
- What is the formula for income and expenditure approach of GDP?arrow_forwardPlease give a fully detailed response to the question below.arrow_forwardThe expenditure and value-added approaches to calculating GDP arrive at the same final number, but they reach that number in different ways. To illustrate, consider the possible effects of the following set of transactions on GDP:arrow_forward
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