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Q2a) Employ the circular flow of income model to measure
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- d) Research the concept of measuring GDP using the value added approach and provide aworking definition?e) Explain the problem of "double-counting" and how it can be avoided in calculating GDP.This question has four parts. (its not a writing assignment, just asking for a numerical value or simple answer) 1.1. What is the US GDP for the first quarter and second quarter of 2020? What is the personal consumption expenditures for the first quarter and second quarter of 2020? Go to the website for the Bureau of Economic Analyses (BEA): https://www.bea.gov/ Section 1: Domestic Product and Income; Table 1.1.5 1.2. Use the information in Table 1 to analyze aggregate expenditures (AE) model below (Figure 1. Equilibrium in a Private Closed Economy). (table 1 and figure 1 are in the attachments) 1.3. Identify the mistake and explain why the graph of the aggregate expenditures line does not correctly illustrate the economy's equilibrium. 1.4. Create a graph for the aggregate expenditures (AE) model using the data from Table 1: A Private Closed Economy. Tips: Remember, the 45degree line (also known as the Keynesian Cross) is a tool that shows how differences in aggregate…Q3 In a simple macroeconomic model, the value of national income Y may be found by solving the system: G= 250 (government expenditure) T= 50 (taxation) I= 100 (planned investment) C = 0.75Yd + 150 (consumption) where disposable income Yd = Y – T. (a) Calculate the equilibrium level of national income. (b) Calculate the total increase in government expenditure and investment needed to increase the equilibrium level of national income by 20.
- Explain two (2) limitations of GDP as an indicator of performance and social welfare of an economyIf Gladys sells her 1998 Jeep Cherokee for $3,500 in 2016, the sale of her car contributes $3,500 to 2016 GDP. 1) True 2) FalseWhich of the following factors will affect the core PCE (Personal Consumption Expenditure) deflator? Select ALL that apply: Oprice of housing rents in American cities salaries paid to domestic workers Opriced of crude oil produced in Oklahoma Oprice of fresh vegetables in grocery stores price of imported iPads manufactured in India
- Explain THREE (3) limitations in measuring the real GDP.The gross domestic product (GDP) of the United States is defined as the _market value of v all final goods and services produced within the United States in a given period of time. Based on this definition, indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in 2020. 2020 GDP Scenario Included Excluded Fastlane, a Japanese automobile company, produces a sedan at a plant in Indiana on December 14, 2020. A family buys the sedan on December 24. Rotato, a U.S. tire company, produces a set of tires at a plant in Michigan on September 25, 2020. It sells the set of tires to Speedmaster for use in the production of a two-door coupe that will be made in the United States in 2020. (Note: Focus exclusively on whether production of the set of tires increases GDP directly, and ignore the effect of production of the two-door coupe on GDP.) You chop down a cherry tree on your property in California and make a dining room table in…The national income model for an economy is represented as follows (units are in Ksh.M) Y = C + I + G + X – M I = 320 + 0.20Y G = 980 C = 540 + 0.80Y M = 640 + 0.25Y X = 850 Y = National income; C = Consumption; I = Investment; G = government spending; X = Exports; and M = Imports. Determine the following.TRUE or FALSE: This model has three endogenous variablesAnswer 1Choose... TRUE or FALSE: The country’s marginal propensity to save is 20%.Answer 2Choose... Autonomous level of importsAnswer 3Choose... Equilibrium investment Answer 4Choose... Equilibrium national incomeAnswer 5Choose... Net Exports (NX) Answer 6Choose... TRUE or FALSE: The economy is a net importer
- Question 1a) Give the definition of GDP and explain what items are not included in its calculation?b) How is GDP calculated using the expenditure approach?c) How is GDP calculated using the income approach?d) Research the concept of measuring GDP using the value added approach and provide aworking definition?e) Explain the problem of "double-counting" and how it can be avoided in calculating GDP.A National Income Model has been presented as:Y = C + I0 + G C = a + b (Y - T0)G = gYUsing Matrix Inversion Method, solve for equilibrium levels of National Income (Y), Consumption ( C )and Govt. Expenditure ( G )?Based on this definition, indicate which of the transactions in the following table will be included in (that is, directly increase) the GDP of the United States in 2019.