Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 24.A, Problem 2DQ
To determine
The difference between government spending and government purchases.
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Chapter 24 Solutions
Economics: Principles & Policy
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- From the expenditures approach, list and explain the components of GDP ? Example?arrow_forwardWhen a business buys a new computer to design its product, this spending is called? A. Goverment expenditure B. Investment C. Consumption D. Exportarrow_forwardWhat is the biggest spending component of GDP?arrow_forward
- Use data below to answer the following questions:Consumption expenditures $300 billion, Government purchases $50 billionTaxes $40 billion, Investment $80 billion, Social Security payments $20 billionImports $30 billion, Exports $40 billiona) How much is GDP?b) How much are net exports?c) Social Security payments are government expenses. Should they be included in GDP? Explain.arrow_forwardWhat is the level of private consumption in GDP is 10,000, investment is 2,900, government spending is 1,600, imports are 3,100, and exports are 3,500?arrow_forwardWhat is the relative importance of consumption spending (C) in aggreagte demand and some factors that affect it? What is the relative importance of investment spending (I) in aggreagte demand and some factors that affect it? What is the relative importance of government spending (G) in aggreagte demand and some factors that affect it? What is the relative importance of Net Export (NX) (Net Export = spending on exports (X) - imports (M)) in aggreagte demand and some factors that affect it?arrow_forward
- 1. If imports are $2 trillion, exports are $1.9 trillion, consumption is $3.8 trillion, investment is $700 billion, and government spending is $1.1 trillion, how much is GDP? 2. If consumption is $2.5 trillion, investment is $900 billion, government spending is $700 billion, imports are $1.2 trillion and exports are $1.4 trillion, how much is GDP?arrow_forwardExplain some reasons why consumption spending and gross private domestic investment spending are so important. What determinants do they have in common?arrow_forward1. If imports are $2 trillion, exports are $1.9 trillion, consumption is $3.8 trillion, investment is $700 billion, and government spending is $1.1 trillion, how much is GDP? 2. If consumption is $2.5 trillion, investment is $900 billion, government spending is $700 billion, imports are $1.2 trillion and exports are $1.4 trillion, how much is GDP? Example: If GDP rises from $6 trillion in 1994 to $8 trillion in 1999 and the GDP deflator in 1999 is 110, find real GDP in 1999 and find the percentage increase in real GDP between 1994 and 1999. First, we are asked to find real GDP in 1999. To do this we divide the nominal GDP, which is $8 trillion ($8,000 billion), by the GDP deflator for 1999, which is 110. This then is multiplied by 100. Real GDP in 1999 is $7,273 billion or $7.2 trillion. To find the percent change you must find the difference of real GDP between 1999 and 1994. Change in GDP = 7,232 – 6,000 = 1,232 You then take this difference and divide it by GDP in…arrow_forward
- If national income is $13 Trillion, Net Exports are -$3.5 Trillion, Investment is $2 Trillion, and Consumption is $10 Trillion, what is the value of Government Purchases?arrow_forwardWhat are government transfer payments? Are they included as part of the government spending component of GDP?arrow_forwardIn Zionville, GDP is $26,500. Consumption spending is $12,000, Investment spending is $5000, exports are $2000, and imports are $500. What is government spending? Question 4 options: A) $6500 B) $8000 C) $3000 D) $7000arrow_forward
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