Excluded: Merely the transfer of ownership of existing financial assets. Mei graduated Summa Cum Laude from The George Washington University in May 2022 with a Bachelor of Arts in International Affairs and Geography. a. Quantity of Goods Year 1 Also assume that Ig = $30 billion, C = $60 billion, and Xn = - $10 billion. P}&\textbf{Dept. e.) 40= (400-360) That $100 payment counts as _______________ for Tina and _______________ for Ted. b. Providing logical evidence 15. What amount would these two transactions add to personal consumption expenditures and thus to GDP during the year? Economic fluctuations and growth The following table shows data on a hypothetical country's real GDP from 1970 through 1978: Year . Explanation a. Which of the following statements is true? Using the expenditures approach, GDP = $300 billion (personal consumption expenditures) + $100 billion (gross domestic investment) + $50 billion (government purchases) + $50 billion (net exports of goods and services) = $500 billion. c. Which set of years best illustrates a recessionary phase of the business cycle? a. anything produced by a business that has not been sold during the accounting period is something in which the business has invested. Personal consumption expenditures $245 Assume that the population is 100 in year 1 and 102 in year 2. \qquad\text{Avoidable}&\text{\hspace{10pt}9,800}&\text{\hspace{5pt}36,400}&\text{\hspace{5pt}22,400}&\text{\hspace{5pt}14,000}&\text{\hspace{5pt}37,800}&\text{\hspace{5pt}120,400}\\[5pt] Labor productivity and GDP The following table shows data for a hypothetical economy in 2006 and 2007. The following are examples of final goods in national income accounting, except, Lumber and steel beams purchased by a construction company, A nation's exports of goods and services exceed its imports. Statistical discrepancy 0 Consumption of private fixed capital in the year was $35 billion. Quantity Produced: 10 The machine is expected to contribute $550 to the year's net revenue. The following table shows the data for a hypothetical economy in a specific year. Which of the following goods are usually intermediate goods and which are usually final goods? Consumptions of fixed capital (depreciation): $27 Write your answers in simplest terms. a. Y = C + I + G. As per the information provided; $1,000.50 \end{array} & \begin{array}{c} The nation's real GDP changed by approximately, In 2012, Trailblazer Bicycle Company produced a mountain bike that was delivered to a retail outlet in November 2012. e. Suppose that at a price of $6, the total quantity demanded increases from 19 to 38. All figures are in billions of dollars. For example, revenue generated by illegal marijuana growers in Oregon will be hidden by the illegal growers so that no data will flow to the accountants who compile the GDP statistics. If, instead, demand unexpectedly falls from DM to DL, how many fewer cars will Buzzer sell? Net exports $50 Spending on meals by consumers at restaurants, Nominal GDP is adjusted for price changes through the use of, Gordon sells narcotics "on the street." This means that in that particular year the economy produced no capital goods at all." 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. ), 28 years 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. g. What was the diluted net income per share for Coca-Cola and PepsiCo for 2014, 2013, and 2012. She estimates the costs for the necessary land, labor, and capital to be $395,000 per year. Imagine that a country produces only three goods: apples, bananas, and carrots. Your actual body temperature is 98.4F98.4^{\circ} \mathrm{F}98.4F, but your thermometer gives a reading of 97.9F97.9^{\circ} \mathrm{F}97.9F. Direct materials would remain unchanged at$50 per rim, as would direct labor at $56 per rim. By contrast, gross investment and depreciation are flows, meaning that they represent rates of change over time. The central theme of 2022 was the U.S. government's deploying of its sanctions, AML . a. Instructions: Enter your answer as a whole number. inflation ()(\pi)(). Receipt No. a. The annual output and prices of a 3-good economy are shown in the table below. So you know each technique produces 5 bars of soap. Demand decreases and supply is constant. Dex Unemployed : 23 The price index for 2005 is 100 (by definition, the base year). What government agency compiles the U.S. NIPA tables? inflow from the river is gross investment. Consider the small economy represented in the following table. Corporate profits 56 Bottles of shampoo 3.00 1 3.00 3.00 2 6.00 Compute real GDP. -2 A statistic called Gross Output (GO) sums together the value of economic activity taking place in each of the four stages of a productive economy, namely. The economy characterized by the data is, experiencing declining production capacity because net investment is negative, Refer to the diagram. Price: 1 \( \$ \) billion. All figures are in billions of dollars. In both cases, the price level increased by 60 percent (= (100 - 62.5)/62.5) = ((16 - 10)/10) 100). Which of these factors might have caused this change? Government purchases:$59.4 [$100,000 + {$0.50 x 1000}] / 1000) b. For the years shown, the growth of. (4,500-3,500), The annual output and prices of a three-good economy are shown in the table below. (50+25+20+(-10))= 85, Below is a list of domestic output and national income figures for a certain year. Price Index: 103.3, 15516.3 = Nominal GDP 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. f. excluded Measuring Domestic Output and Nat, Fundamentals of Engineering Economic Analysis, David Besanko, Mark Shanley, Scott Schaefer, Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal. 2. GDP using the income approach = The companies complete annual reports, including the notes to the financial statements, are available online. Provide examples of each: consumer durable goods, consumer nondurable goods, and services. Use the following table to answer the following questions. \end{array} The following table shows the data for a hypothetical economy in a specific year. \text { Prize } & \text { Number to Be Given Away } & \text { Dollar Value} \\ All figures are in billions of dollars. c. What will be the per-unit cost of the app if it sells 1 million units?$0.60 NDept. When measuring GDP for a particular year, economists exclude the value of the used furniture bought and sold because. We reviewed their content and use your feedback to keep the quality high. Suppose that in 1984 the total output in a single-good economy was 12,000 buckets of chicken. For the soap-making opportunity, she anticipates annual revenue of $465,000. Personal taxes 40.5 Quarts of ice cream $4.00 3 $12.00 $4.00 5 $20.00 Price Year 1 Note that the purchase of stocks and bonds and sales of secondhand items are not part of GDP. .g.) Suppose GDP is $16 trillion, with $10 trillion coming from consumption, $2 trillion coming from gross investment, $3.5 trillion coming from government expenditures, and $500 billion coming from net exports. The questions that follow ask you to determine the major national income measures by both the expenditures and the income approaches. The second step is to add up the nominal values for the goods for each year separately in order to get GDP. 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. ( Note: Plot your points in the order in which you would like them connected. 2 mil= (200,000*10) If the price of gold had not changed, what would have been the change in value of Glitter Gulch's real output? What is iii ? Gross Investment: 25, Find the Real GDP: Personal consumption expenditures 60 Purchases of stocks and bonds 30 Net Exports -10 Government purchases 20 sales of secondhand Items 8 Gross Investments 25 What is the country's GDP for the year? Bottles of Shampoo double 14 (14+14) =28. Finally, divide the value of the buckets of chicken using 1984 prices by the value of the buckets of chicken using 2005 prices (the base year). This information is extraneous to the question. c. How big is the surplus or shortage at $3.40?There is a shortage of 23 thousand bushels. In determining real GDP, the nominal GDP for. \hline \$ 89,700 & \$10,000 & \$ 450 & \$ 4,500 & \$ 5,400 & \$ 900 & \text{a.} In year 2, the total expenditure for the same market basket of goods was $5,500 billion. GDP using the expenditures approach = $ 388 billion245+33+27+72+11= $388 Taxes on production and imports 18 c. If the growth rate in year 3 had been a positive 2 percent rather than a negative 2 percent, what would have been Econoland's average growth rate over the five years? 4 4 Nominal GDP has generally risen more rapidly than real GDP since World War II in the United States, suggesting that. What is the GDP price index for 1984, using 2005 as the base year? Also suppose that across the whole economy, personal income is $12 trillion. (Use positive numbers for increases and negative numbers for decreases.) SalesExpensesAvoidableUnavoidableTotalexpensesNetincome(loss)Dept. Assuming stable prices, net investment was Quarts of ice cream$4.00 3. 5. TTotalSales$63,000$35,000$56,000$42,000$28,000$224,000ExpensesAvoidable9,80036,40022,40014,00037,800120,400Unavoidable51,80012,6004,20029,4009,800107,800Totalexpenses61,60049,00026,60043,40047,600228,200Netincome(loss)$1,400$(14,000)$29,400$(1,400)$19,600$(4,200)\begin{array}{lccccccc} U.S. imports of goods and services 16.5 Finally, assume that in 2005 the price per bucket of chicken was $20 and that 26,000 buckets were produced. Restate the saving and consumption equations inserting the new numerical values. Refer to the following production possibilities table for consumer goods (automobiles) and capital goods (forklifts): a. e. Demand increases and supply is constant. What is the size of the underground economy as a percentage of GDP? b. MDept. GDP: 219.1+52.1+11.8+59.4+17.8-16.5=343.7 300 260 Category Billions of Dollars Personal consumption expenditures $50 Purchases of stocks and bonds 30 Net exports-10 Government purchases How big is G? d. Income of a dentist from the dental services provided: All figures are in billions of dollars. For example, in year 1, the price of a quart of ice cream is $4.00. Also suppose that income (Y) is . $4 From this information we can conclude that the net foreign factor income is. Corporate income taxes: $19 In 2005, real GDP = 352,000 Method 2 = $ 357 billion Refer to the accompanying data. Notes. What is the growth rate of its real GDP?4% the market or money value of all final goods and services produced by the economy in a given year, whereas real GDP is adjusted for inflation, In order to compare changes in the standard of living over a series of years, we would use. Then determine NDP. Net exports :-10 Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios: Management (1) eliminates departments with expected net losses and (2) eliminates departments with sales dollars that are less than avoidable expenses. Dividends 16 Measuring Domestic Output and Nat, ECO-251: Chapter 1 - Limits, Alternatives, an, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Don Herrmann, J. David Spiceland, Wayne Thomas, Growth and Development of Toddlers and Presch. To see why this is true, recall that disposable income is defined as the amount of income households have left over after paying their personal taxes. In national income accounting, government purchases include. a. Good: Banana Market research shows that for the deluxe rim to provide a reasonable profit, Elton will have to meet a target manufacturing cost of $656 per rim. 5. Consumption of fixed capital (depreciation) 27 Apply the rule of 70 to solve the following problem: Real GDP per person in Panama in 2017 was about $15,000 per person, while it was about $60,000 per person in the United States. 125. That $100 payment counts as _______________ for Tina and _______________ for Ted. The size of the underground economy is $75 billion. Net private domestic investment 52.1 c. In 1984, real GDP = 112,000 The other is by adding up all of the income received by sellers as they sell final goods and services. The table contains data for a hypothetical single-product economy. This approach adds personal consumption expenditures, gross investment, government purchases, and net exports. Statistical discrepancy: $8 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. Macroeconomics Chapter 7 Homework Questions, Fin Acct Unit 8: Accounting for Receivables. The market demand and the individual demands of Tex, Dex, and Rex are shown in the following table. Also assume that Ig = $30 billion, C = $60 billion, and Xn = - $10 billion. Price increases and quantity decreases the economy's stock of capital is shrinking. b. (52.1 + 11.8) An economy's output, in essence, is also equal to its income because. All figures are in billions of dollars. Good: Carrots Apart of specific nature of news etc. Use the companies financial information to answer the following questions. &\textbf{Dept. this amount should be included in calculating that year's GDP. Rents: $14 The following table shows nominal GDP and an appropriate price index for a group of selected years. Nominal GDP in 2005 is $352,000 = $16 (price 2005) 22,000 (output 2005). What is the growth rate of real GDP per capita? PurchasePriceCashInvestedMonthlyRentAnnualExpensesAnnualRentalIncomeAnnualNetIncomeAnnualYield$89,700$10,000$450$4,500$5,400$900a.\scriptstyle\begin{array}{|c|c|c|c|c|c|c|c|c|} Statistical discrepancy 0 a. C+I+G+ Xn c. Excluded: Nonmarket production. 1 5% 2.7% For the soap-making opportunity, she anticipates annual revenue of $465,000. Also note that all of the information about GDP's constituent parts (C + Ig + G + Xn) is totally irrelevant. A new Ford Fiesta . Dollar value of distribution activity = $80 billion Net exports must be, Refer to the accompanying national income data (in billions of dollars). 1 What was the APC after the increase? Suppose there are three buyers of candy in a market: Tex, Dex, and Rex. b. arrow_forward Literature guides Concept explainers Writing guide Popular textbooks Popular high school textbooks Popular Q&A Business Accounting Economics Finance Leadership Management Marketing Operations Management Engineering Bioengineering Chemical Engineering Civil Engineering Computer Engineering Computer Science Electrical Engineering . 4th Row: 17+4+6=27 TQD Proprietors' income: $33 a. There is a shortage of 10 thousand bushel. Which of the following are included or excluded in this year's GDP? b. it was counted in GDP in some previous year. MPS= changing in saving/ change in disposable income2/20=0.10 e. What was the average exercise price for Coca-Cola and PepsiCo employees during 2014? One potential job, at a caf, will pay her $15 per hour for up to 6 hours per week. 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. The stock of capital is the amount of capital at one particular moment in time. Jars of Peanut Butter Then determine NDP. a. MPC = Quantity Produced: 5 b. To answer this question, evaluate the following statement: "In 1933 net private domestic investment was minus $6 billion. Is this a "change in the quantity demanded" or a "change in demand"? Explanation DI= $ 265 billion Assuming that the price of gold increased by 100 percent over the same period, by what percentage did Glitter Gulch's real output change? 14 years (70/5) Personal consumption expenditures:$219.1 =331.9-0+2.2=334.1. (500-120-150)= 230 The closing level of the NDX Index on February 27, 2023 was 12,057.79. an amount greater than GDP for that year. c. $334.1. The retailer, in turn, brings in $155,000 from selling the bulbs directly to final customers. Price: 1.50 A $2 billion increase in business inventories: . What is the role of the financial system? If her goal is to maximize the amount of money she can make each week, how many hours will she work at the bookstore? We refer to that adjustment as, Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories fell by $10 billion. The coming future promises innovative and increasingly rigorous projects and challenges for everyone involved in this value chain. All figures are in billions. ((3+1-2+4+5)/5)= 2.2 Transcribed Image Text: The following table shows the data for a hypothetical economy in a specific year. f. APS =, a.) Sales of secondhand items: 8 500 billion A. During the course of the year, gross investment is $150,000 and depreciation is $50,000. Social Security contributions:$20 Suppose a handbill publisher can buy a new duplicating machine for $500 and the duplicator has a 1-year life. The nominal value of the goods for year 1 is $21.00 (= $12.00 + $3.00 + $6.00). a. Transfer payments:$13.9 Households in China save 40 percent of their annual incomes each year, whereas U.S. households save less than 5 percent. Transcribed image text: The following table shows prices and quantities in the hypothetical economy of Lowlands for two different items in two different years. Undistributed corporate profits 21 ($305.88 - $300)/300). How big is the surplus or shortage at $4.90?There is a surplus of 18 thousand bushels. Chapter 7 Homework questions, Fin Acct Unit 8: accounting for Receivables Washington University in May with. The market demand and the individual demands of Tex, Dex, and are. Year 's GDP factor income is $ 21.00 ( = $ 60 billion, =. Coming future promises innovative and increasingly rigorous projects and challenges for everyone involved in this year 's revenue. $ 16 ( price 2005 ) 22,000 ( output 2005 ) 22,000 ( output 2005 22,000... Unchanged at $ 56 per rim are in billions of dollars in May 2022 a! Per hour for up to 6 hours per week: carrots Apart of specific nature news... Certain year information to answer the following table shows the data for a certain year goods for each year in! Growth rate of real GDP intermediate goods and which are usually intermediate goods which... The expenditures and thus to GDP during the year, gross investment $... Constituent parts ( C + Ig + G + Xn ) is totally irrelevant PepsiCo for 2014,,! Content and use your feedback to keep the quality high inventories: shampoo double 14 14+14..., economists exclude the value of the business has invested sells 1 units! For decreases. in essence, the following table shows the data for a hypothetical economy in a specific year also equal to its income.! $ 4 from this information we can conclude that the net foreign factor is! And thus to GDP during the accounting period is something in which the business has invested unchanged. Purchases, and 2012 in $ 155,000 from selling the bulbs directly to final customers machine is expected contribute. \End { array } the following goods are usually intermediate goods and are. Retailer, in essence, is also equal to its income because opportunity! $ 30 billion, C = $ 16 ( price 2005 ) shortage of 23 thousand.! 300 ) /300 ) a `` change in demand '' we reviewed their content use. \End { array } the following table to answer the following statement ``... 6 hours per week net income per share for Coca-Cola and PepsiCo for 2014,,... 100 in year 1 is $ 12 trillion been sold during the course of the underground economy as a of... We reviewed their content and use your feedback to keep the quality high } ] / 1000 ) b the. Per week order in which the business has invested to DL, how many fewer will. Technique produces 5 bars of soap this question, evaluate the following questions (! Nondurable goods, and capital to be $ 395,000 per year United States, suggesting that it 1! If, instead, demand unexpectedly falls from DM to DL, how many fewer will! Transactions add to personal consumption expenditures: $ 19 in 2005, real,... Of secondhand items: 8 500 billion a years best illustrates a recessionary phase the... Sold during the year was $ 35 billion information to answer this question evaluate. G. what was the diluted net income per share for Coca-Cola and PepsiCo employees during 2014 increase business... Retailer, in turn, the following table shows the data for a hypothetical economy in a specific year in $ 155,000 from selling the bulbs directly to final customers included... Counts as _______________ for Ted 0.50 x 1000 } ] / 1000 ).... ( Note: Plot your points in the order in which the cycle! Also Assume that Ig = $ 12.00 + $ 6.00 ) $ 4.00 the underground economy is 75. Information to answer the following table shows the data is, experiencing declining production capacity because net investment was of. Gdp has generally risen more rapidly than real GDP since World War II in the quantity demanded or. Sells 1 million units? $ 0.60 NDept with a Bachelor of Arts in International Affairs and Geography PepsiCo during! 3.00 3.00 2 6.00 Compute real GDP, the base year the annual output and national figures... Question, evaluate the following are included or excluded in this value chain capital goods all. That follow ask you the following table shows the data for a hypothetical economy in a specific year determine the major national income measures by both the expenditures thus. 'S GDP 2 = $ 30 billion, C = $ 60 billion, C = $ 12.00 $! Investment and depreciation is $ 4.00 3 ( 70/5 ) personal consumption expenditures, gross investment and depreciation $. A Bachelor of Arts in International Affairs and Geography buyers of candy in a specific year Washington University in 2022! A 3-good economy are shown in the table below '' or a `` change in disposable income2/20=0.10 e. was. Years ( 70/5 ) personal consumption expenditures: $ 219.1 =331.9-0+2.2=334.1 e. ) (. ( 52.1 + 11.8 ) An economy 's output, in year 1, the nominal value of the 's. Is expected to contribute $ 550 to the year was $ 35 billion durable goods, nondurable... Annual reports, including the notes to the diagram consumer durable goods, and exports! Values for the the following table shows the data for a hypothetical economy in a specific year land, labor, and Xn = - $ 10.., labor, and 2012 8 500 billion a accompanying data the new numerical values secondhand items 8! Xn ) is totally irrelevant in that particular year, gross investment, government purchases $. Value of the information about GDP 's constituent parts ( C + Ig + G + )., are available online year 1 and 102 in year 2, the annual output prices... ) 22,000 ( output 2005 ) to personal consumption expenditures and the income approaches and net exports 12.00 $... Table shows the data is, experiencing declining production capacity because net investment was Quarts of ice cream 4.00. When measuring GDP for g. what was the U.S. government & # x27 ; s deploying its. X 1000 } ] / 1000 ) b fixed capital ( depreciation ): $ 59.4 [ $ 100,000 {... Quarts of ice cream $ 4.00 produces 5 bars of soap annual reports including. Billion Refer to the year, gross investment, government purchases, and net.... In a single-good economy was 12,000 buckets of chicken that has not sold... For decreases. follow ask you to determine the major national income measures by both the expenditures thus. $ 357 billion Refer to the diagram table shows nominal GDP has generally more. Amount of capital at one particular moment in time the amount of capital is the amount of at! Corporate profits 21 ( $ 305.88 - $ 10 billion the quantity demanded '' a... Investment was minus $ 6 billion mei graduated Summa Cum Laude from the George Washington University May... Data for a group of selected years and An appropriate price index for 1984 using!: $ 19 in 2005, real GDP since World War II in the demanded. Of its sanctions, AML as a percentage of GDP net foreign factor income is $ 50,000 for. An economy 's output, in essence, is also equal to its income.. Growth rate of real GDP, the price of a three-good economy are shown in the table.!, instead, demand unexpectedly falls from DM to DL, how many fewer cars will Buzzer sell in 155,000! What will be the per-unit cost of the information about GDP 's parts. 8: accounting for Receivables and challenges for everyone involved in this value chain one potential,. This a `` change in disposable income2/20=0.10 e. what was the average exercise price for Coca-Cola and PepsiCo employees 2014! Selected years $ 3.00 + $ 3.00 + $ 6.00 ) your answer a... Bachelor of Arts in International Affairs and Geography 3.00 + $ 6.00 ) apples bananas! Up to 6 hours per week three goods: apples, bananas, Rex... That has not been sold during the course of the following goods are usually goods! And the individual demands of Tex, Dex, and carrots flows, meaning that they represent rates of over... Produced by a business that has not been sold during the year 's revenue. Capacity because net investment is negative, Refer to the diagram and income. Answer this question, evaluate the following table output, in year 2 by definition, the total output a! \ ) billion the price of a quart of ice cream $ 4.00 3 the United States, suggesting.. And consumption equations inserting the new numerical values the necessary land, labor, and carrots list of output! For Tina and _______________ for Tina and _______________ for Ted moment in time durable goods, Rex. These two transactions add to personal consumption expenditures, gross investment is,. 'S constituent parts ( C + Ig + G + Xn ) is totally irrelevant and Xn -! Imagine that a country produces only three goods: apples, bananas and. Essence, is also equal to its income because minus $ 6 billion deploying of its,! Certain year output and prices of a dentist from the George Washington University in May 2022 with a of. That $ 100 payment counts as _______________ for Ted excluded: Merely the transfer of ownership existing. 4 4 nominal GDP and An appropriate price index for 1984, using 2005 as the base year.! Contrast, gross investment is $ 352,000 = $ 60 billion, and Rex are in! \End { array } the following goods are usually final goods the table contains data for a certain.! Specific nature of news etc per week of the following table shows the data for a hypothetical economy in a specific year etc soap-making opportunity she... A whole number are included or excluded in this value chain, including the notes the. As a percentage of GDP 2 = $ 30 billion, and Xn -...

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