(a)
Identify whether the sale of the used book to college bookstore will affect the current year’s
(a)
Explanation of Solution
The gross domestic product (GDP) measures the final value of the goods and services produced by a nation in a given period. Since the used textbook value will already be accounted for in last year GDP. Therefore, the resale of the used textbook into a college bookstore will not affect current year’s GDP and the GDP remains unchanged.
(b)
Identify whether the settlement of bill will affect the current year’s GDP.
(b)
Explanation of Solution
Person S settles bill of $500 to doctor because of his service. Since the gross domestic product (GDP) will be accounted for the production of goods and services, hence, the event will affect the GDP and it will increase.
(c)
Identify whether the lawn service provided by 16-year-old child affects the current year’s GDP.
(c)
Explanation of Solution
A 16-year-old child provides service to mowing his own family lawn, but it will not generate any revenue. Hence, the scenario will not affect current year’s GDP because the GDP will be accounted for the production of output and service, which generates revenue, hence, GDP remains unchanged.
(d)
Identify whether the lawn services purchased from neighborhood affects the current year’s GDP.
(d)
Explanation of Solution
Person S purchases a service from a lawn-mowing businessman, hence, Person S paid wages for the service. Since the gross domestic product (GDP) will account for the production of output and service, which generates the revenue. Therefore, the scenario will affect the GDP and GDP will increase.
(e)
Identify whether the purchase of shares of stock and sales commission affects the current year’s GDP.
(e)
Explanation of Solution
The shares of stock’s value will be accounted in previous year’s GDP, hence, the purchase of shares of shock will not affect the current year GDP, but the sales commission of $250 will affect the GDP and the GDP will increase.
(f)
Identify whether the discovery of natural gas affects the current year GDP.
(f)
Explanation of Solution
A multibillion-dollar worth of natural gas discovered in Country O, which will not affect the current year GDP of Country U. Therefore, the GDP remains unchanged.
(g)
Identify whether the impact of natural disaster affects the current year GDP.
(g)
Explanation of Solution
The natural disaster like hurricane causes damage in Country F, hence, it will affect the GDP of Country F. Therefore, the GDP will not change.
(h)
Identify whether the income earned by the professor from abroad affects the current year GDP.
(h)
Explanation of Solution
The professor earned income from Country E. Since it does not specify that, the professor spends it in his native country. Therefore, it will not affect the GDP and GDP would not change.
Want to see more full solutions like this?
Chapter 7 Solutions
Macroeconomics: Private and Public Choice (MindTap Course List)
- Page 551 5. Using the following national income accounting data, compute (a) GDP, (b) NDP, and (c) NI. All figures are in bilions. Compensation of employees $194.2 U.S. exports of goods and services 17.8 Consumption of fixed capital 11.8 Government purchases 59.4 Taxes on production and imports 14.4 Net private domestic investment 52.1 Transfer payments U.S. Imports of goods and services 13.9 16.5 Personal taxes 40.5 Net foreign factor income 2.2 Personal consumption expenditures 219.1 Statistical discrepancyarrow_forwardMeasuring Economic Performance (chapter 11) 2. Adam's Ribs in downtown Chicago buys $10,000 worth of beef ribs, $25,000 worth of pork ribs, and $8,000 worth of napkins each month. Are these purchases included in the calculation of gross domestic product? Explain your answer. be creative workarrow_forwardThe following table shows some data for an economy that produces only two goods: milk and honey. Milk Honey Price Quantity Price Quantity Year (Dollars) (Quarts) (Dollars) (Quarts) 2020 1 150 100 2021 150 4 100 2022 300 4 200 Using 2020 as the base year, compute nominal GDP, real GDP, and the GDP deflator for each year. Nominal GDP Real GDP Year (Dollars) (Dollars) GDP Deflator 2020 2021 2022 IIarrow_forward
- Which 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_forwardA country has just one resource - labor - that it can use to produce two goods, books and clothing. At first the country has 10 million workers, and each worker can produce either 2 books or 5 units of clothing per day. Suppose the country wants to produce 8 million books. Suppose the price of a book is $10, and the price of a unit of clothing is $20. Using this information and your answer from the last question, calculate the country's GDP (measured in dollars per day). Enter your answer as a number in the space below. (For example, if your answer is $3.75 million, enter it as 3750000 in the space below.)arrow_forwardWhich of the following would be captured and included in the calculation of GDP? A) The cost of hospital stays. The rise in life expectancy over time. (C) Child care provided by a licensed day care center. Child care provided by a grandmother at home. A used car sale to the Brown family. A new car sale to the Brown family. (G) The greater variety of cheese available in supermarkets. The iron that goes into the steel that goes into a refrigerator bought by the Brown family.arrow_forward
- indicate whether you think the statement is true or false and explain why 1. Capital and energy are often considered compliments. 2. A cost or benefit that arises from production (or consumption) and falls on someone other than the producer (or consumer) is called a property right. 3. When analyzing changes in energy efficiency it is important to use real (constant dollar)GDP.arrow_forwardClassify each of the following items as a final good or service or an intermediate good or service, and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services. A. A textbook bought by a student B. A computer purchased for a senator's office C. New cars bought by Hertz, the car rental firm D. Aluminum sheets bought by Boeing 1. A is a final good that is consumption expenditure, B is a final good that is government expenditure, C is a final good that is investment, and D is an intermediate good. 2. A is a final good that is investment, B is an intermediate good, C is a final good that is investment, and D is an intermediate good. 3. A is a final good that is consumption expenditure, B is an intermediate good, C is a final good that is consumption expenditure, and D is a final good that is investment. 4. A is a final good that is consumption expenditure, B is a final good…arrow_forwardA student had the following expenditures last month: rent, $500; food expense, $200, cost of a used textbook from the bookstore, $50; cost of new shoes, $100; and cost of gas for the car, $100. Which of these items are included in gross domestic product (GDP)? Edit View Insert Format Tools Table 12pt v Paragraph v B I U A O words Iarrow_forward
- What 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_forwardWhich of the following transactions are or are not included in GDP? 1. The pollution created when building an electric car battery. 2. Your parent washes, dries, and folds your laundry. 3. You consume a meal at Jack in the Box. 4. You buy a Rolex watch on the streets of Redwood City. 5. You volunteer to help clean up at your church after services on Sunday. 6. You write a Yelp review of Dr. Eck's restaurant.arrow_forwardQuestion 34 Which of the following would be not be included in the GDP of the U.S.? There is more than one correct answer to this question. You must mark all of the correct answers to receive full credit for this question. Your neighbor sells a bicyde that he purchased two years ago. O LG Chem (a Korean firm) makes batteries in the u.S. and sells them to General Motors (a U.S. firm) in the U.S. o Tesla (a U.S. firm) makes a car in China and sells it there. Honda (a Japanese firm) produces cars in the U.S. and sells them here. O Pízer (a U.S. company) makes a vaccine in Germany and sells it in Sweden. Question 35 Assume there is a reduced time preference to spend now. What change would be expected in the market for loanable funds? The supply of loanable funds would increase. O The demand for loanable funds would decrease. o The demand for loanable funds would increase. o The supply of loanable funds would decrease.arrow_forward
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning