MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Question
Chapter 5, Problem 5SQP
To determine
Explain the possibility of double counting.
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For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M). Check all that apply.
Transaction
C
I
G
X
M
The Pennsylvania Department of Transportation, a state administration, fixes potholes along PA highway 23, which feeds into the center of Conshohocken.
Felix's employer upgrades all of its computer systems using U.S.-made parts.
Janet's father in Sweden orders a bottle of Vermont maple syrup from the producer's website.
Janet gets a new video camera made in the United States.
Felix buys a sweater made in Guatemala.
For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C),
investment (I), government purchases (G), exports (X), or imports (M). Check all that apply.
Transaction
Felix paints a landscape and sells it to an art collector in Canada.
Deborah buys a new BMW, which was assembled in Germany.
The Azinians build an addition on their house.
The Federal Aviation Administration expands the runways at Philadelphia International Airport, which is just
a few miles from Carlos and Deborah's house.
Deborah gets a new refrigerator made in the United States.
C
0
U
0
I
0
0
0
G
0
0
0
0
X
0
0
0
M
0
0
0
0
0
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.
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
- Paolo and Sharon Zambetti live in Swarthmore, PA. Their son, Van, is an artist living in New York City. For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M). Check all that apply. Transaction C I G X M Paolo buys a bottle of Italian wine. Sharon gets a haircut. Van paints a landscape and sells it to an art collector in Japan. The Zambettis build an addition on their house. The Federal Aviation Administration expands the runways at Philadelphia International Airport, which is just a few miles from Paolo and Sharon's house.arrow_forwardWhich of the following items are included in the U.S. GDP? For those items not included, explain why they are not included in the U.S. GDP. 1) Jane buys a newly issues shares of stock in Macro.com, Inc. 2) Ross buys a new pair of jeans at a local department store. 3) Joey has his mustache trimmed at hair salon. 4) Rachel buys an antique chest at a resale shop. 5) Monica makes her own pasta sauce in her apartment. 6) Phoebe grow her own herbs on her apartment balcony. 7) Michael travels to Austria and buys wine and cheese made in Austria.arrow_forwardWhich 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 servicesarrow_forward
- There are four spending groups that buy GDP: consumption, investment, government purchases, and net exports. Which group is the largest? Which one fluctuates the most?arrow_forwardLast year, a small nation with abundant forests cut down $200 worth of trees. It then turned $100 worth of trees into $150 worth of lumber. It used $100 worth of that lumber to produce $250 worth of bookshelves. Assuming the country produces no other outputs, and there are no other inputs used in producing trees, lumber, and bookshelves, what is this nation's GDP? In other words, what is the value of the final goods the nation produced including trees, lumber and bookshelves?arrow_forwardWhich of the following would increase the consumption component of U.S. GDP? Select one: OA. A Baton Rouge resident purchases 100 shares of Amazon.com stock. OB. WalMart, a U.S. company, builds a new store in Oklahoma. OC. LSU purchases a new computer produced in the U.S. for Charles to use in his office. OD. A Baton Rouge resident purchases a new washing machine produced in South Korea for use in her home. E. LSU purchases a new computer produced in China for Charles to use in his office.arrow_forward
- A U.S.-owned automobile factory uses $50 million worth of materials produced in the U.S. and $10 million worth of material purchased from foreign countries to produce $100 million of automobiles. $70 million worth of these automobiles are purchased by U.S. consumers, $25 million are sold in foreign countries, and $5 million are added to inventory. How much of this production is included in U.S. GDP? By how much do these transactions alone affect U.S. net exports?arrow_forwardWhich of the following would increase the consumption component of U.S. GDP? Select one: OA. A Baton Rouge resident purchases 100 shares of Amazon.com stock. B. WalMart, a U.S. company, builds a new store in Oklahoma.. C. LSU purchases a new computer produced in the U.S. for Charles to use in his office. OD. A Baton Rouge resident purchases a new washing machine produced in South Korea for use in her home. E. LSU purchases a new computer produced in China for Charles to use in his office.arrow_forwardWhich of the following are included in GDP and which are not? If an item is included, state which GDP category it falls under (consumption, investment, government, trade balance) a) the cost of having your appendix removed b) buying a new car from a dealership c) buying a used car from your neighbor d) the lettuce sold to the sub shop that will go on your sandwich e) babysitting services at a licensed daycare provider f) babysitting services provided by your cousin g) a 2-year increase in life expectancyarrow_forward
- Home production, such as cooking food at home, does not count towards GDP. What do you expect happens to home production during recessions and what is the effect on measured GDP?arrow_forwardGDP is a good and useful measure of general economic activity for each of the following reasons except for which one? (Which one of the following is not either correct or a reason to rely on GDP as a measure of economic activity?) In order to raise the amount of goods and services available in a country, GDP must rise. In order to have a true measure of economic activity, the income of all people needs to be considered, and the value of goods and services for all people must be considered, and GDP considers the income and spending for all people (in the country). The total value of GDP is lower if the distribution of income is lower and less equitable, and is higher if the distribution is higher and more equitable, and this makes GDP a good indicator of aggregate economic activity. In order to raise the income of some people, and have the income of no people go down, GDP must rise. People care about their income, and GDP is a measure of total income.arrow_forwardLarry and Megan Smith live in Swarthmore, PA. Megan's father, Raphael, lives in Sweden. For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M). Check all that apply. Transaction Larry buys a sweater made in Guatemala. The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore. Megan's father in Sweden orders a bottle of Vermont maple syrup from the producer's website. Megan gets a new video camera made in the United States. Larry's employer upgrades all of its computer systems using U.S.-made parts.arrow_forward
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