Econ 1023 (FR05B)
Thanks January twenty-three, 2013
1 . Classify each one of the following products as included or not included in GDP. Give an explanation for those that you judge since not included. Express when appropriate, the expenses category through which each great is included.
a. The purchase of copy paper by simply PepsiCo, that is used by the business staff. Solution: This case is not included in GDP, because it is an more advanced goods.
b. The purchase of an electronic handheld organizer by a revenue manager to read clients. Answer: This case is included in GDP, because it belongs to Produced in a country.
c. The getting a new heli by the Canadian military. Solution: This case is included in GROSS DOMESTIC PRODUCT, because it is Produced in a country. deb. An increase in Compaq Computers' inventory of unsold personal computers. Answer: This case is roofed in the GROSS DOMESTIC PRODUCT, because it is owned by market value. e. A deposit within your savings account because of a view in a suit. Answer: This case is not included in GDP, because it is no goods or services worth in the market. n. The sale of your used computer.
Solution: this case can be not included in GDP, mainly because used computer can be second hand items, and it's GDP included in the many years of it produced. g. The donation of a used computer into a local grammar school. Answer: This case is not included in GDP, because gift is not just a part of the monetary matter.
h. The order by a German resident in Germany of the ceiling lover produced in Canada. Answer: This case is not included in GROSS DOMESTIC PRODUCT, because it is not really finals goods and services.
2 . Making use of the information inside the table below, calculate GDP.
Item| Amount(billions of dollars)
Consumption expenditure| 800
Federal government expenditure| 200
Answer: GROSS DOMESTIC PRODUCT as the sum of consumption costs, investment, government expenditure upon goods and services, and net export products. Therefore , GDP equals to C+I+G+(X-M). GDP=$800+$400+$200+($50-$75)+$100=$1375 enormous amounts
3. The table beneath gives a number of the items in a country's nationwide accounts.
(billions of dollars)
Consumption expenditure| four. 97
Investment| 1 . 16
Government expenditure| 1 . thirty seven
Net exports| 0. 08
Wages, wages, and supplementary labour income| 4. 20| Interest and investment income| 0. 90
Profits of corporations and government enterprises| 0. 67| Income from farms and unincorporated businesses| 0. eleven
Depreciation| 0. 89
a. Use the expenditure approach to determine GDP.
Answer: GDP equates to C+I+G+(X-M) =$4. 97+$1. 14+$1. 37+($-0. 08)=$7. 4 billions b. Compute net home income at factor expense.
Answer: Net domestic cash flow =$4. 20+$0. 90+$0. 67+$0. 11=$5. 88 billions c. Calculate GDP minus net domestic cash flow at aspect cost. Response: $7. 4-$5. 88=$1. 52billions
g. Calculate roundabout taxes much less subsidies.
Solution: 7. 4-0. 89=6. 51 6. 51-5. 88=0. 63billions
5. An isle economy makes only lights and ebooks. The table gives the volumes produced plus the prices in 2001, plus the quantities produced and the prices in 2002.
Item| 2001| 2002
| Quantity| Price| Quantity| Price
Lamps| 90| $15| 100| $20
Books| 20| $20| 25| $25
The base year is 2001. Determine:
a. Nominal GDP in 2001.
Answer: Nominal GROSS DOMESTIC PRODUCT =(90 lighting fixtures $15) + (20 catalogs $20) = $1350+$400=$1750 n. Nominal GROSS DOMESTIC PRODUCT in 2002.
Answer: Nominal GDP =(100 lamps $20) + (25 books $25) = $2000+$625=$2625 c. The cost of 2002 production in 2001 prices.
Answer: (100 lighting fixtures $15) & (25 catalogs $20) = $1500+$500=$2000 g. Percentage increase in production when ever valued for 2001 rates. Answer: the availability increased by $1750 to $2000. [($2000 $1750)/$1750] times 100=14. three or more percent
electronic. The value of 2001 production in 2002 rates.
Answer: (90 lamps...