MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Chapter 5, Problem 10SQ
To determine
The items included in the calculation of the
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Although GDP is a reasonably good measure of a nation’s output, it is not an accurate measure of a nation’s well-being.
Which of the following options are either not accounted for or are measured inaccurately in calculations of GDP for the United States? Check all that apply.
A. The variety of goods available to consumersB. Funds spent by state governments to build highwaysC. The costs of overfishing and other overly intensive uses of resourcesD. The value of babysitting services, when the babysitter is paid in cash and the transaction isn’t reported to the governmentE. The parts of a car manufactured in the United States that are produced in Canada
Which of the following statements best describe how economists calculate GDP?
a. 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.
b. 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.
c. 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.
d. Economists at the Congressional Budget Office calculate GDP for a given year by adjusting the previous year’s GDP with inflation.
Which statement best describes the difference between Nominal and Real GDP?
a. Nominal GDP is Real GDP that has been adjusted to remove the distorting effects of inflation.
b. Real GDP is calculated using current market prices, while Nominal GDP is calculated using the…
Which of the following is a short coming of GDP?
a.GDP excludes changes in inventries.
b.GDP includes an estimate of illegal transactions.
c.GDP exclude nonmarket transations.
d.GDP excludes business investment spending.
Chapter 5 Solutions
MACROECONOMICS FOR TODAY
Ch. 5.6 - Prob. 1YTECh. 5 - Prob. 1SQPCh. 5 - Prob. 2SQPCh. 5 - Prob. 3SQPCh. 5 - Prob. 4SQPCh. 5 - Prob. 5SQPCh. 5 - Prob. 6SQPCh. 5 - Prob. 7SQPCh. 5 - Prob. 8SQPCh. 5 - Prob. 9SQP
Ch. 5 - Prob. 10SQPCh. 5 - Prob. 11SQPCh. 5 - Prob. 12SQPCh. 5 - Prob. 13SQPCh. 5 - Prob. 1SQCh. 5 - Prob. 2SQCh. 5 - Prob. 3SQCh. 5 - Prob. 4SQCh. 5 - Prob. 5SQCh. 5 - Prob. 6SQCh. 5 - Prob. 7SQCh. 5 - Prob. 8SQCh. 5 - Prob. 9SQCh. 5 - Prob. 10SQCh. 5 - Prob. 11SQCh. 5 - Prob. 12SQCh. 5 - Prob. 13SQCh. 5 - Prob. 14SQCh. 5 - Prob. 15SQCh. 5 - Prob. 16SQCh. 5 - Prob. 17SQCh. 5 - Prob. 18SQCh. 5 - Prob. 19SQCh. 5 - Prob. 20SQ
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- Adam lives in California and, after graduating college, opened up an ice cream business on the Venice Beach boardwalk. Which items are not counted in GDP? Select all that apply and explain why each of the items you selected is not counted in GDP. a. Adam purchases a new sub-zero refrigerator for his ice cream shop. b. The neighborhood kids broke Adam's window at the ice cream shop during a baseball game. Adam replaces the window. c. After a successful summer, Adam travels to Egypt to visit the Red Sea. d. Adam sells his used accounting textbook to his best friend Billy. e. Adam spends a Saturday afternoon mowing his elderly neighbor's lawn. He earns $100 cash that day.arrow_forwardWhat does GDP stand for in economics?A) Gross Domestic ProfitB) Gross Domestic PriceC) Gross Domestic ProductD) Gross Domestic Percentagearrow_forwardA farmer produces milk, which he sells to a mill for 1000 tk. The mill turns the milk into cream, which he sells to a baker for 1500 tk. The baker turns the cream into a cake, which he sells to consumers for 2000 tk. Consumers eat the cake.a. What is GDP in this economy? Explain.b. What is the total value added of the three producers in this economy? Does this example suggest another way of calculating GDP?arrow_forward
- Define GDP and distinguish between a final good and an intermediate good. please provide examples.arrow_forwardWhich of the following are included in this year’s GDP? Explain your answer in each case.a. Interest on an AT&T corporate bond.b. Social Security payments received by a retired factory worker.c. The unpaid services of a family member in painting the family home.d. The income of a dentist.e. The money received by Smith when she sells her economics textbook to a book buyer.f. The monthly allowance a college student receives from home.g. Rent received on a two-bedroom apartment.h. The money received by Josh when he resells his current year- model Honda automobile to Kim.i. The publication of a college textbook.j. A 2-hour decrease in the length of the workweek.k. The purchase of an AT&T corporate bond.l. A $2 billion increase in business inventories.m. The purchase of 100 shares of GM common stock.n. The purchase of an insurance policy.arrow_forwardAs an economist with the World Bank you have been asked to measure the Gross Domestic Product for the US for 2019. You are told that the private consumption, gross domestic investment, government purchases and exports all add up to $ 24 trillion. You later learn that imports to the US in 2019 were $4 trillion. To get GDP, you should A. Ignore the $ 4 trillion because exports have already been included in the $ 24 trillion B. Add $ 4 trillion to $24 trillion because imports are used as inputs in the production of other goods in the US C. None of the above D. Subtract $4 trillion from $24 trillion because imports are not part of US domestic outputarrow_forward
- Explain the shortfalls of analyzing GDP, by itself, to assess the state of the economy.arrow_forwardWhich of the following would NOT be counted as a final good for inclusion in GDP? A: a. sheet of glass produced this year and ending up in the inventory of a retail store b. sheet of glass purchased by a commercial builder of a new home c. home that is built this year but is not sold d. piece of glass bought by a consumer to fix a broken windowarrow_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_forward
- Consider the expenditure approach to the measurement of GDP. For each of the following situations, decide if the transaction will affect GDP and, if so, in which expenditure category will it be included. A household purchase of a home built in 2005. A household purchase of a newly built dishwasher. A farmer purchases a new tractor to work his or her field. A disabled individual receives a transfer from Oman government. The Sultanate Department of Defence buys ten helicopters just built in the U.S.A.arrow_forwardQ. 3 Take as much of your time as you need and do it right. explain everything. Which of the following Items to be Included or Excluded in GDP? Explain with reasons. Food purchased by a foreign tourist at a hotel in Cox’s bazar. Construction of a new house Winning of a lottery prize. Why is it difficult to compare GDP from different countries? Explain it in detail. You are given the following cases; find out the loan-able funds market equilibrium. Also, show them as a graph Changes in capital inflows Changes in perceived business opportunities and in government borrowingarrow_forwardAccording to the table (in billions of dollars), Consumption $1,000 Interest $80 Corporate Profits $200 Government Purchases $480 Depreciation $120 Rent $300 Gross Private Investment $400 Compensation of Employees $750 Exports $100 Imports $180 Proprietor’s Income $220 Income Earned but not Received $110 Income Received but not Earned $230 a. Calculate GDP using the Expenditure Approach b. Calculate GDP using the Income Approacharrow_forward
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