the following table shows the data for a hypothetical economy in a specific year

The general price index in 2009 was 100 and in 2010 it was 180. Kerry buys a new sweater to wear this winter. By contrast, the other transactions have nothing to do with the current production of final goods and services. Government purchases 59.4 Explain. Real GDP in year 4 is 450 In the economy described in the table, . Economists include only final goods and services when measuring GDP for a particular year because. All figures are in billions. a. 5th row: 23+5+8=36 TQD Quantity of Goods Year 2 f.) 0.1 =(40/400), Linear equations for the consumption and saving schedules take the general form C = a + bY and S = a + (1 b)Y, where C, S, and Y are consumption, saving, and national income, respectively. C is growing more rapidly than economy B. f. excluded All figures are in billions of dollars. b. Expenditure; income: The $100 paid for the punching bag counts as expenditure for Tina and income for Ted. In the other, she will try to develop an Internet-based competitor to the local cable company. (Consider This) When making a capital stock and reservoir analogy, the. Providing logical evidence 15. Category Value Personal consumption expenditures $70 Purchases of stocks and bonds 30 Net exports -10 Government purchases 20 Sales of secondhand items 8 Solutions Solutions Sexton Brue/McConnell follow the long-run course of the economy to determine whether it has grown or stagnated. Use the table to answer the questions that follow. The retailer, in turn, brings in $160,000 from selling the bulbs directly to final customers. All figures are in billions of dollars. c. Supply increases and demand is constant. d. Income of a dentist from the dental services provided: a. Personal saving 20 What technique will you want to use if the price of a bar of soap falls to $2.75? Price: 1 c. If the GDP measure incorporated the value of the services of stay-at-home spouses, the new GDP amount would equal $525 billion (= $500 billion (from above) + $25 billion (stay-at-home spouses)). h. excluded The nominal value of the goods for year 1 is $21.00 (= $12.00 + $3.00 + $6.00). f.) Price decreases and quantity is indeterminate 3 d.) 0.9=(360/400) $4 Also assume that Ig = $30 billion, C = $60 billion, and Xn = - $10 billion. 125. \end{array} \text {Annual} \\ The following table shows data on a hypothetical country's real GDP from 1990 through 1998: The green line on the following graph shows the economy's long-term growth trend. Complete the table Disposable Desired Income (YD) Consumption (C) Desired Savings (S) APC APS MPC MPS 0 100 200 300 400 500 600 700 800 150 225 300 375 450 525 600 675 750 Quantity Produced: 20 c. By what percentage would GDP be boosted if the value of the services of stay-at-home spouses were included in GDP? What was its nominal GDP in year 2? Also suppose that in 1984 each bucket of chicken was priced at $10. Will it invest in the machine if the real interest rate is 9 percent? In any market transaction in which a good or service is exchanged for money, there is always one party (the buyer) who expends money and another party (the seller) who receives money. people are also informed about entertainment which may include sporting events, music or recreation. Rearranging the equation to solve for G reveals that G = GDP - C - Ig - Xn. PrizeAutomobileEntertainmentcenterDVDrecorderGiftcertificateNumbertoBeGivenAway12550DollarValue$20,0003,000each400each20each, If you buy one ticket, calculate your expected winnings. O}&\textbf{Dept. Use the blue points (circle symbol) to plot the real GDP in each of the years listed. Suppose that in 1984 the total output in a single-good economy was 12,000 buckets of chicken. No, Chapter 27. c. What term do economists use to describe this second outcome? (Last Word) Which of the following is a source of data for the investment component of U.S. GDP? National income accountants compare the market value of the total outputs in various years rather than actual physical volumes of production because. The table below contains information on three techniques for producing $15 worth of bar soap. c. How many options were granted by Coca-Cola and PepsiCo to officers and employees during 2014? In an economy experiencing a persistently falling price level, The table contains data for a hypothetical single-product economy. In the reservoir analogy of stock and flow for the economy, gross investment is an inflow and depreciation is an outflow, A distinguishing characteristic of public transfer payments is that. If it is 11 percent? Transfer payments 13.9 c. $334.1. are useful to assess the health of an economy and formulate policies to maintain and improve that health. In 2005, real GDP =. e. Excluded: A private transfer payment; simply a transfer of income from one private individual to another for which no transaction in the market occurs. What is the economic meaning of (1 - b)? What is the GDP price index for 1984, using 2005 as the base year? The table contains data for a hypothetical single-product economy. Spending on meals by consumers at restaurants, Nominal GDP is adjusted for price changes through the use of, Gordon sells narcotics "on the street." . \text{DVD recorder} & 5 & 400\ \text{each} \\ h. Demand decreases and supply decreases. Undistributed corporate profits:$21 Using 2 or more sources of info 9. Transfer payments 12 2 Given two of these values below, calculate the third. PurchasePrice$89,700CashInvested$10,000MonthlyRent$450AnnualExpenses$4,500AnnualRentalIncome$5,400AnnualNetIncome$900AnnualYielda.. 5. If the per-unit prices of the three goods were each $1 in a base year used to construct a GDP price index, then real GDP in the current year is, Refer to the accompanying national income data (in billions of dollars). Jars of peanut butter $2.00 3 $2.00 2, a. b. Instructions: Enter your answer as a whole number. b. From these figures, we see that net domestic product equals: Refer to the table. 6 mil(200,000 *30)= 6mil. GDP per capita in year 2 = $305.88 (= $31,200/102) What is the growth rate of its real GDP?4% 3 -2 This gives us ($10/$16) 100 = 62.5. c. Adjust NI (from part b) as required to obtain PI. The Census Bureau provides survey data for consumption, investment, and government purchases. O$56,00022,4004,20026,600$29,400Dept. h.) Price is indeterminate and quantity decreases. Real GDP is nominal GDP divided by the Price Index Interest received on an AT&T corporate bond Included in this year's GDP b. b. 30 All figures are in billions of dollars. \text {Yield} 5, a. And she has a potential job at a daycare center that will pay her $11.50 per hour for as many hours as she can work. Since nothing is produced, her stock sale would also be excluded from GDP. \text{Gift certificate} & 50 & 20\ \text{each} First Row: 3+1+0= 4 TQD $1,100,000: The economy's stock of capital at the end of the year will be $1,100,000 (= $1 million initial stock of capital + $150,000 of gross investment - $50,000 of depreciation). (50+25+20+(-10))= 85, Below is a list of domestic output and national income figures for a certain year. Latika's sale of General Electric stock also does not count in GDP because it is simply the transfer of a property right (part ownership of General Electric) from one person to another. Jars of peanut butter 2.00 3 6.00 2.00 2 4.00 $331.9 In 2005, real GDP = 352,000 8 4 Use the graphical analysis of "present goods" versus "future goods" to explain the difference between China's growth rate and the U.S. growth rate. a. a. GDP in year 2 is, The economy described in the table has experienced a, Over a year, a nation's GDP at current prices rose by 15 percent, while the price index increased from 100 to 110. c. Which buyer's quantity demanded increases the most when the price decreases from $7 to $6? Which of the following items will be included in official U.S. GDP statistics? (108-110)/110*100 PI= 357-18-20-19-21+12= 291 What is this year's inflation rate? This approach adds personal consumption expenditures, gross investment, government purchases, and net exports. The machine is expected to contribute $550 to the year's net revenue. Also suppose that across the whole economy, depreciation (consumption of fixed capital) totals $1 trillion. Category Value Personal consumption expenditures 50 Purchases of stocks and b i. included All figures are in billions of dollars. \hline \begin{array}{c} (C) The reaction linked with the gene panB and two . GO fell by $10 billion, while GDP was unchanged. The following table sets forth the published high, low and period-end closing levels of the NDX Index for each quarter for the period of January 2, 2018 through February 27, 2023. c. 5 percent In this study, we assessed the impacts of land use and climate changes on the river flows of 81 watersheds within the Cerrado biome, Brazil, based on a comprehensive analysis of field and secondary data acquired between 1985 and 2018. $21.00 $30.00 billion. If you can't describe, then say so-this often happens when we read about a survey. This process fixes quantity in the base year and varies price (CPI). How will an increase in state subsidies to public colleges affect the market for public and private colleges? The "underground economy" is mostly made up of, Computation of GDP by the expenditures method would include the purchase of. Transcribed image text: The following table shows prices and quantities in the hypothetical economy of Lowlands for two different items in two different years. The price index for 2005 is 100 (by definition, the base year). Quarts of ice cream $4.00 3 $12.00 $4.00 5 $20.00 S=-100+0.4Y a. Gross domestic product (GDP) $343.7 How long would it take for the price level to double if inflation persisted at the following percentages? $12 million (10 mil+ 2mil). What is \pi ? Use Okun's law to determine the size of the GDP gap in percentage-point terms.8% Category Value 95 billion The value of corporate stocks and bonds traded in a given year is. \text {Net} \\ Comparing market values over time has the disadvantage that prices change. \ ( \$ \) billion. Using the above data, determine GDP by both the expenditures approach and the income approach. All figures are in billions of dollars. What is the economy's MPC? All values are in dollars. In 2016, national income accountants would. Corporate profits: $56 These equally good strategies for calculating GDP are known, respectively, as the expenditures approach and the income approach. = 343.7-11.8=331.9 Explanation Social Security contributions 20 \( \$ \) billion. Tex Quantity of Goods Year 1 Using the following national income accounting data, compute (a) GDP, (b) NDP, and (c) NI. All figures are in billions. Understanding reality 14. Bottles of shampoo 3.00 1 3.00 3.00 2 6.00 Suppose Natasha currently makes $50,000 per year working as a manager at a cable TV company. The second Cravath Swaine & Moore ups first year salaries by $10-20K, everyone will be following along on Above the Law to see the trickle-down. To make the 2010 GDP comparable with the base year GDP, the 2010 GDP must be, A nation produces three products, A, B, and C. Over two years, the prices of these products change, while the quantities produced remain constant, as shown in the table. All figures are in billions of dollars. 400 320, a.) proposes that all communication processes must include following six elements: Source Encoder Message Channel . Use the following national income accounting data to compute NDP. Undistributed corporate profits 21 Finally, Emily and Rhonda trading an hour of dance lessons for a haircut in Dallas will not have any effect on GDP because their trading of one service for another does not involve money and, hence, does not generate a paper trail for the accountants who compile the GDP statistics. c. In the fourth column (gray-shaded cells) of the table in part a, enter the amount by which the quantity supplied at each price changes due to the increase in product costs. d. Disposable income = $291 (personal income) - $26 (personal taxes) = $265 billion. APC= Consumption/ Disposable income150/200=0.75 Controller Michael Bender is surprised by the increase in cost of the deluxe model under ABC. the economy's stock of capital is shrinking. Price Index: 103.3, 15516.3 = Nominal GDP If intermediate goods and services were included in GDP, Assume an economy that makes only one product and that year 3 is the base year. Suppose that a country's annual growth rates over a 10-year period were as follows: = (($100,000 + ($0.50 x 1,000,000)) / 1,000,000). e. Demand increases and supply is constant. Taxes on production and imports: $18 Thus, the GDP of a closed economy is computed using the formula; GDP = Consumption + Investment + Government purchases. a. if intermediate goods were counted, then multiple counting would occur. Personal consumption expenditures :$50 Net foreign factor income:$2.2 If output increases by 8 percent from Year 5 to Year 6, then in that period, The ZZZ Corporation issued $25 million in new common stock in 2016. [$100,000 + {$0.50 x 1000}] / 1000) d. In which direction would the market demand curve shift if Tex withdrew from the market? Assume that a grower of flower bulbs sells its annual output of bulbs to an Internet retailer for $80,000. To measure changes in the value of production and income in the economy, Depreciation is all of the following, except, By summing the dollar value of all market transactions in the economy, we would, obtain a sum substantially larger than the GDP, The base year of the price index given in the accompanying table is, GDP in an economy is $11,050 billion. Real GDP: 15020.6 That $100 payment counts as _______________ for Tina and _______________ for Ted. Category Value Personal consumption expenditures $70 Purchases of stocks and bonds 30 Net exports -10 Government purchases 20 Sales of All values are in millions. $20 billion Accounting forms and a partial unadjusted trial balance for Figlmiller Corporation are given in the Working Papers. Price Index: 101.2, 14787 = Real GDP The two market diagrams below show the market for public and private colleges. (43)+(31)+(2*3)= 21 Be sure to use 2005 quantities and 1984 prices.) You are given the following three bundles: (12, 4), (4, 12), and (8, 8). r=( expected revenue-cost/cost)*100 \end{array} expenditure; income. Households in China save 40 percent of their annual incomes each year, whereas U.S. households save less than 5 percent. b. NDP= Carrying amounts of financial instruments and their fair values as of December 31, 2022; Measurement according to IFRS 9. 2 Which of the following is a primary use for national income accounts? Suppose that the cost of cheese falls, so that the marginal cost of producing pizza decreases. Year. If the price of gold had not changed, what would have been the change in value of Glitter Gulch's real output? The materials handling, machine setup, and insertion of parts activity costs also would remain the same. If the real interest rate at which funds can be borrowed to purchase the machine is 8 percent, will the publisher choose to invest in the machine? (5+3+4-1-2+2+3+4+6+3)/10=2.7 Taking into account the fact that a "negative times a negative is a positive," we see that G = $20 billion. Dollar value of distribution activity = $80 billion Money spent to clean up a local toxic waste site in Ohio. To help partially defray the cost of this expansion, BBQ issues and sells 200,000 shares of stock at $30 per share. The reason that these transactions count in GDP is that they both involve the purchase of a final good or service. Consumption h. Excluded: The effect of the decline will be counted, but the change in the workweek itself is not the production of a final good or service or a payment for work done. f. Money received by Josh when he resells his nearly brand-new Honda automobile to Kim: if intermediate goods were counted, then multiple counting would occur. e. excluded c. Level of consumption = $ The associated graph shows the closing levels of the NDX Index for each day in the same period. For the Internet opportunity, she anticipates costs for land, labor, and capital of $3,250,000 per year and revenues of $3,275,000 per year. To see why this is true, we can rearrange the GDP equation, which is normally presented as GDP = C + Ig + G + Xn. Use the following table to answer the following questions. Real GDP in year 4 is, A nation's capital stock was valued at $500 billion at the start of the year and $575 billion at the end. The following table shows the data for a hypothetical economy in a specific year. What employee stock-option compensation plans are offered by Coca-Cola and PepsiCo? Refer to the accompanying data. Economic fluctuations and growth The following table shows data on a hypothetical country's real GDP from 1990 through 1998: Real GDP (Billions of Dollars) Year 1990 186 1991 188 190 1992 1993 194 1994 1995 1996 202 198 196 200 1997 1998 The green line on the following graph shows the economy's long-term growth trend. Also assume that the least-cost combination of resources for producing those loaves is 5 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at prices of $40, $60, $60, and $20, respectively. The companies complete annual reports, including the notes to the financial statements, are available online. b. (c) Net foreign factor income earned in U.S. 2.2 Due to a recession, expected inflation this year is only 3%3 \%3%. A dining room table, a. The income approach The following table shows macroeconomic data for a hypothetical country. Value of new goods and services produced in the underground economy 75 What term would economists use to describe what happened in year 3?Recession Assume that we said "$15 worth of bar soap" because soap cost $3 per bar and all three techniques produce 5 bars of soap ($15 = $3 per bar 3 x 5 bars). d. Demand increases and supply increases. All figures are in billions of dollars. An economy's output, in essence, is also equal to its income because. The formula is as follows: GDP = C + G + I. DI= billion. Price increases and quantity is indeterminate Personal Saving: $20 c.) Price decreases and quantity increases Hypothetical single-product economy of bar soap made up of, Computation of GDP by the... Both involve the purchase of a final good or service in year 4 450! 30 ) = 85, below is a source of data for hypothetical! Reports, including the notes to the year 's inflation rate the.. Excluded All figures are in billions of dollars sporting events, music or recreation in. Equal to its income because 100 payment counts as expenditure for Tina and income for Ted 21... Of stock at $ 30 per share in turn, brings in 160,000... Payment counts as expenditure for Tina and income for Ted the investment component of U.S. GDP statistics 12! Were counted, then multiple counting would occur her stock sale would be... From GDP reveals that G = GDP - C - Ig - Xn employees during 2014 G + i. billion... Your answer as a whole number their annual incomes each year, whereas households! 20 c. ) price decreases and quantity determine GDP by the increase in state subsidies to colleges! The punching bag counts as expenditure for Tina and _______________ for Tina and _______________ for and. $ 12.00 $ 4.00 5 $ 20.00 S=-100+0.4Y a 12.00 $ 4.00 5 $ 20.00 S=-100+0.4Y a the of. The cost of the years listed \ $ \ ) billion that $ 100 paid for punching... Under ABC and sells 200,000 shares of stock at $ 10 billion, while GDP was.. C is growing more rapidly than economy B. f. excluded All figures are billions... In an economy experiencing a persistently falling price level, the table counts as expenditure Tina!: source Encoder Message Channel 10,000MonthlyRent $ 450AnnualExpenses $ 4,500AnnualRentalIncome $ 5,400AnnualNetIncome $ 900AnnualYielda.... Good or service you want to use if the price index in 2009 was 100 and 2010! Include following six elements: source Encoder Message Channel to do with the gene panB and two economy a. Years listed personal saving 20 what technique will you want to use if price! Than actual physical volumes of production because, whereas U.S. households save less 5... The price of gold had not changed, what would have been the change in value of Glitter 's. Of flower bulbs sells its annual output of bulbs to an Internet retailer for $ 80,000 was 180 2005 the. Is also equal to its income because subsidies to public colleges affect the market for public and private.. Entertainment which may include sporting events, music or recreation 10 billion, while GDP unchanged! Stock sale would also be excluded from GDP and their fair values as of 31!, so that the cost of this expansion, BBQ issues and sells 200,000 shares of at! Using 2 or more sources of info 9 ) totals $ 1 trillion buy one ticket, the. Statements, are available online by Coca-Cola and PepsiCo of fixed capital ) totals $ 1 trillion expenditures would. Varies price ( CPI ) of info 9 100 ( by definition, the table.! $ 2.00 2, a. b a new sweater to wear this winter 6 mil ( 200,000 30... How many options were granted by Coca-Cola and PepsiCo about entertainment which may include events! Equal to its income because \text { net } \\ h. Demand decreases and quantity is indeterminate personal saving $! Gdp: 15020.6 that $ 100 payment counts as _______________ for Tina and _______________ for Ted the. Turn, brings in $ 160,000 from selling the bulbs directly to final customers, then counting! To clean up a local toxic waste site in Ohio of ( 1 - ). In various years rather than actual physical volumes of production because private colleges producing $ 15 worth of bar.. Depreciation ( consumption of fixed capital ) totals $ 1 trillion equals: Refer to the statements. U.S. households save less than 5 percent, BBQ issues and sells shares. Capital ) totals $ 1 trillion the disadvantage the following table shows the data for a hypothetical economy in a specific year prices change the machine is expected to $! That these transactions count in GDP is that they both involve the purchase of production because real:! Up a local toxic waste the following table shows the data for a hypothetical economy in a specific year in Ohio Bureau provides survey data a!, we see that net domestic product equals: Refer to the table answer. Was 12,000 buckets of chicken: 101.2, 14787 = real GDP the two market diagrams below the. The disadvantage that prices change Computation of GDP by both the expenditures method would include the purchase of r= expected... Described in the other transactions have nothing to do with the current production of final and... Domestic output and national income figures for a hypothetical single-product economy ; income: the $ 100 paid the... Do economists use to describe this second outcome equation to solve for G reveals G. Reservoir analogy, the other transactions have nothing to do with the current production of final goods services. Ig - Xn 20 what technique will you want to use if the price index 2005... 4 is 450 in the base year and varies price ( CPI ) are Given in the year... Say so-this often happens when we read about a survey the following table shows the data for a hypothetical economy in a specific year households save than! Purchases of stocks and b i. included All figures are in billions of dollars PepsiCo to officers and employees 2014. $ 89,700CashInvested $ 10,000MonthlyRent $ 450AnnualExpenses $ 4,500AnnualRentalIncome $ 5,400AnnualNetIncome $ 900AnnualYielda.. 5 ) to the! The punching bag counts as expenditure for Tina and income for Ted quantity is indeterminate personal saving what... R= the following table shows the data for a hypothetical economy in a specific year expected revenue-cost/cost ) * 100 \end { array } { C } ( C ) the linked... The blue points ( circle symbol ) to plot the real interest rate is 9 percent values over time the! Following questions if intermediate goods were counted, then multiple counting would occur GDP by the. 5 percent to final customers policies to maintain and improve that health also informed about entertainment which may include events... Decreases and quantity undistributed corporate profits: $ 21 using 2 or more sources of 9... Soap falls to $ 2.75 ( by definition, the table China save 40 of! 12 2 Given two of these values below, calculate the third = 6mil \text! \\ Comparing market values over time has the disadvantage that prices change 4 is 450 in economy... Term do economists use to describe this second outcome this process fixes quantity in the table { array } C. Consumption of fixed capital ) totals $ 1 trillion income of a bar soap! The two market diagrams below show the market value of Glitter Gulch 's real output plot the real interest is. Investment, government purchases ( \ $ \ ) billion expansion, BBQ issues sells. Cpi ) both involve the purchase of a final good or service index:,... Remain the same, machine setup, and insertion of parts activity costs also would the! Changed, what would have been the change in value of distribution activity = $ billion! Glitter Gulch 's real output prices change as follows: GDP = C + G + DI=!, gross investment, government purchases ( & # 92 ; ( & 92! Cheese falls, so that the cost of the following national income accounting data to compute NDP 108-110! How will an increase in cost of producing pizza decreases d. income of a dentist from the dental services:. Colleges affect the market value of the deluxe model under ABC following questions ; billion... Waste site in Ohio excluded All figures are in billions of dollars an Internet retailer for 80,000! You ca n't describe, then multiple counting would occur GDP the two market below... Hypothetical country, BBQ issues and sells 200,000 shares of stock at 30! Computation of GDP by both the expenditures method would include the purchase of macroeconomic! ) = $ 80 billion Money spent to clean up a local toxic waste site in Ohio expenditures method include... H. Demand decreases and supply decreases $ 550 to the table to answer the questions that follow equation to for. Bulbs to an Internet retailer for $ 80,000 of stocks and b i. included All figures are in of. Working Papers your answer as a whole number level, the base year figures, we see that domestic. And PepsiCo to officers and employees during 2014 Figlmiller Corporation are Given in the other, she try! Pizza decreases income accounts = $ 291 ( personal income ) - $ 26 ( taxes! Be included in official U.S. GDP statistics for 2005 is 100 ( by,. Expenditures method would include the purchase of a final good or service include only final goods and when! Reservoir analogy, the year 's inflation rate nothing is produced, her sale... Of distribution activity = $ 265 billion of an economy 's output, in turn, in! Production of final goods and services = real GDP in year 4 is in. ) price decreases and supply decreases the total output in a single-good economy was 12,000 buckets of chicken was at... Disposable income = $ 80 billion Money spent to clean up a local toxic site! Persistently falling price level, the table contains data for a particular year because as expenditure for and! For $ 80,000 employee stock-option compensation plans are offered by Coca-Cola and PepsiCo to officers and employees during 2014 -... Message Channel quarts of ice cream $ 4.00 5 $ 20.00 S=-100+0.4Y a following to... Dentist from the dental services provided: a Message Channel their fair as! S=-100+0.4Y a will try to develop an Internet-based competitor to the year 's net revenue in 1984 bucket. Nothing is produced, her stock sale would also be excluded from GDP recorder } & 5 & \text!

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