Explanation Banking services bought by target is final good. It.is bought by target customer, so it is consumption expenditure. Security system bought by the white house is an intermediate good because it is bought for security. It is an investment expenditure. Coffee beans bought by a company are intermediate goods as they will be further processed and will be sold to consumers.Coffee beans bought by a company is an investment...

Final good or service or an intermediate good and whether it is consuption, investment or government expenditure.

Place the transactions below in their appropriate categories in the GDP and calculate the overall effect on the GDP of the United States. GDP = Consumption Expenditure + Investment + Government spending + Net Exports a. My total gasoline bill for a year ($1,500) b. A Chinese citizen buys a U.S. government bond ($5,000) c. A Landscaping firm’s gasoline costs for a year ($2,500): d. A School district buys new uniforms for its basketball team ($1100) e. I invest in a fidelity mutual fund ($2,000)

A small economy produced the following final goods and services during a given month: 3 million pounds of food, 50,000 shirts, 20 houses, 50,000 hours of medical services, 1 automobile plant, and 2 tanks. Good or Service Quantity Market Price Value of Output (Per unit) Pounds of food 3 million pounds $1 Shirts 50,000 $21 Houses 20 $50,000 Medical services 50,000 hours $20 Automobile plant 1 $1,000,000 Tanks 2 $500,000 Based on your calculations, the total value of GDP in this economy is?

Question 22 Table 2.1 GDP and its components, 2012 Source: Bureau of Economic Analysis. Table 1.1.5, Note:Numbers may not add up to the totals due to rounding. Personal consumption expenditure (C) Consumer durables Nondurable goods Services Investment (1) Fixed investment Inventory investment Residential investment Government purchases (G) Federal State and local Net exports (NX) Exports Minus imports Total = GDP (Y) www.bea.gownational/nipaweb/SelectTable.asp?Selected=Y Billions of Dollars 11,286 1,231 2,595 7,459 2,500 2,018 13 469 3,151 1,275 1,875 -516 2,214 2,730 16,420 Percent of GDP 68.7 7.5 15.8 45.4 15.2 12.3 0.14 2.9 19.2 7.8 11.4 -3.1 13.5 16.6 100.0 Assuming that the GDP breakdown shown in Table 2.1 is typical of a given year in the U.S. we can say that government purchases is the largest main component of GDP consumption of durable goods is twice that of nondurables we spend twice as much on goods consumption as we do on services all of the above none of the above

b. Analyze how much Pakistan’s GDP and each of its components is affected by the following transactions? Explain your answers . i. Toyota Motors issues new shares to finance the construction of an automobile plant in Pakistan.ii. Your friend wins Rs.2 million in the lottery in Dubai iii. Rabia spends Rs.1500 to buy her husband dinner at the finest restaurant in Karachiiv. General Motors builds Rs.40 million worth of cars, but consumers only buy Rs. 38 million worth of them.v. Sadia spends 50000 on a computer to use in her editing business in Karachi. She got last year’s model on sale for a great price from a local manufacturer.

Question 15 Which of the following statements is correct regarding measuring GDP? GDP can be measured either as the total spending on domestically produced goods and services, or the total value added in domestic production, or sum of all incomes received from domestic production A B C D E GDP can be measured only as the total spending on domestically produced goods and services Information about exports but not imports is necessary to calculate GDP- Government production is not included in the GDP The value added of government production is computed using the price that public goods and services are sold at in the market

106. Which of these would be included in Canadian consumption? O A French resident buys a new house in Canada Samantha produces some art work to decorate her house. A Canadian resident buys a car manufactured in Brazil. Beverly buys a newly issued stock in a Canadian corporation

1. Calculate the values for the blanks in the shaded areas of the table below (identify your responses in a logical fashion in your document): Expenditure Components of GDP by Country, 2018 (billions of US dollars) Australia Canada Denmark Finland India Japan New Zealand UK US Consumption 808.7 996.9 165.9 146.1 1650.6 2763.3 120.0 1870.5 13998.7 Investment Business fixed investment 336.9 385.1 78.8 65.6 842.7 1202.5 49.1 487.3 4260.7 Changes in inventories 0.1 9.4 2.9 3.4 27.4 11.2 0.1 5.8 54.7 Government 275.5 357.1 86.6 62.7 312.1 981.6 38.4 528.3 2904.3 Net Exports 917.1 58.2 Exports Imports 348.5 544.9 197.9 106.8 548.6 856.8 2510.2 312.0 581.1 176.4 108.8 657.0 904.4 58.1 907.1 3148.5 GDP Source: UNData, UN Statistics Division, data.un.org, GDP by Type of Expenditure at current prices – US dollars

1. Calculate the values for the blanks in the shaded areas of the table below (identify your responses in a logical fashion in your document): Expenditure Components of GDP by Country, 2018 (billions of US dollars) Denmark Finland Australia Canada India Japan New Zealand UK US Consumption 808.7 996.9 165.9 146.1 1650.6 2763.3 120.0 1870.5 13998.7 Investment Business fixed investment 336.9 385.1 78.8 65.6 842.7 1202.5 49.1 487.3 4260.7 Changes in inventories 0.1 9.4 2.9 3.4 27.4 11.2 0.1 5.8 54.7 Government 275.5 357.1 86.6 62.7 312.1 981.6 38.4 528.3 2904.3 Net Exports Exports Imports 348.5 544.9 197.9 106.8 548.6 917.1 58.2 856.8 2510.2 312.0 581.1 176.4 108.8 657.0 904.4 58.1 907.1 3148.5 GDP Source: UNData, UN Statistics Division, data.un.org, GDP by Type of Expenditure at current prices – US dollars 2. Based on the information in the table and your calculations for Question #1: Do any countries have positive net exports? Which one(s)? Which country has the largest negative net…

Place each of the following transactions in one of the four components of expenditure: consumption, investment, government purchases, and exports/imports 1. Island Manufacturers ( Jamaica) sells furniture to the Hilton Hotel in Barbados 2. Island Manufacturers (Jamaica) sells furniture to St Michael Golf Resort in Barbados 3. Island Manufacturers (Jamaica) sells furniture to John Doe 4. Island Manufacturers (Jamaica) sells furniture to the Jamaican Government 5. Island Manufacturers (Jamaica) builds a new line of home furniture to be sold next year.

4. Classify each of the following items as a final good or service or an intermediate good or service and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services: Banking services bought by a student. New cars bought by Hertz, the car rental firm. Newsprint bought by USA Today. The purchase of a new limo for the president. New house bought by Al Gore

Final good or service or an intermediate good and whether it is consuption, investment or government expenditure.

Solution Summary: The author explains that final goods are services, while intermediate goods and services are purchased by firms for further processing and reselling.

Final good or service or an intermediate good and whether it is consuption, investment or government expenditure.

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Chapter 21 Solutions