MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Question
Chapter 5, Problem 16SQ
To determine
The items included in the calculation of the
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Indicate whether each of the following transactions is included or not included in the GDP of the United States.
a. A textbook is purchased by a student in New Jersey in yesterday. The book was made
Hawaii just last week.
b. Forty pounds of apples grown by a Washington farmer and traded this morning
to his neighbor for ten pounds of honey.
c. A hundred dollars paid to you for babysitting last night at a home near the university.
The $100 was in cash with no records kept, i.e., under the table.
d. The $90 purchase of materials by you made today at the Home Depot in Springfield.
You plan to build a doghouse in your backyard yourself. The doghouse is
for your dog.
e. A fighter jet produced in Texas last month and sold this morning to Saudi Arabia.
f. Eight tons of coal mined in West Virginia last month was sold today to a power plant
in Tennessee. The power plant immediately started using the coat to generate power
for over 30,000 homes and businesses in the Nashville area.
g. Tom retired…
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.
Which 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.
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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Similar questions
- A farmer grows a bushel of wheat and sells it to a Miller for $20.00. The Miller turns the wheat into flour and then sells it to a Baker for $25.00. The Baker uses the flour to bake bread and sells the bread to a Musician for $40.00. The Musician eats the bread. The Musician, also grows pumpkins in his backyard garden to feed his family. a) Why does GDP not include goods that are resold? b) why is it desirable for a country to have a large GDP?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_forwardA farmer grows a bushel of wheat and sells it to a miller for $1.00. The miller turns the wheat into flour and then sells the flour to a baker for $3.00. The baker uses the flour to make bread and sells the bread to an engineer for $6.00. The engineer eats the bread. What is the value added by each person? What is GDP?arrow_forward
- Which of the following are included in this year’s GDP? Which are excluded or included. a. Interest received on an AT&T corporate bond: b. Social Security payments received by a retired factory worker: c. Unpaid services of a family member who painted the family home: d. Income of a dentist from the dental services she provided: e. A monthly allowance that a college student receives from home: f. Money received by Josh when he resells his nearly brand-new Honda automobile to Kim: g. The publication and sale of a new college textbook: h. An increase in leisure resulting from a 2-hour decrease in the length of the workweek, with no reduction in pay: i. A $2 billion increase in business inventories: j. The purchase of 100 shares of Alphabet (the parent company of Google) stock:arrow_forwardFor each of the following scenarios, tell whether GDP would change and how each of the components of GDP would be affected. Honda expands its factory in Marysville, Ohio. You buy a bucket of fried chicken. Cousin Fred buys a newly built house. A family buys a new washing machine made this year in this country. Chrysler sells a Jeep from its inventory to an American household. California repaves Highway 101. An Italian household buys a bottle of California wine. In the Land of Milk and Honey, they produce two goods: Milk and Honey. In 2014, milk cost $2 a gallon and they produced 20 gallons. Honey cost $1 a pint and they produced 40 pints. In 2015, milk cost $2 a gallon and they produced 24 gallons. Honey cost $1 a pint and they produced 48 pints. In 2016, milk cost $2.50 a gallon and they produced 24 gallons. Honey cost $1.25 a pint and they produced 48 pints. The base year is 2015. During which time period did standard of living improve more? From 2014 to 2015 or From 2015 to…arrow_forwardA farmer grows a bushel of wheat and sells it to a Miller for $20.00. The Miller turns the wheat into flour and then sells it to a Baker for $25.00. The Baker uses the flour to bake bread and sells the bread to a Musician for $40.00. The Musician eats the bread. The Musician, also grows pumpkins in his backyard garden to feed his family. a) what is the GDP? b) what is the value added by each person ? c) should pumpkins be included in the GDP?arrow_forward
- A 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_forwardWhich item would not be included in the GDP? You pay a $45 service fee to have your teeth cleaned It costs $4.99 per hour to process would pulp from trees grown in Canada by a paper factory in Maine A computer company in Kansas developed a new program this year and sells it to company in China for $25 per license Fresh corn, grown in lowa, is sold for $6 a dozen to shoppers in New York.arrow_forwardWhich of the following are counted in this year’s GDP? Explain your answer in each case. A. Flashy Car Company sold a used car. B. Juanita Jones cooked meals for her family. C. IBM paid interest on its bonds. D. José Suarez purchased 100 shares of Microsoft stock. E. Bob Smith received a welfare payment. F. Carriage Realty earned a brokerage commission for selling a previously owned house. G. The government makes interest payments to persons holding government bonds. H. Air and water pollution increase. I. Gambling is legalized in all states. J. A retired worker receives a Social Security payment.arrow_forward
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