I need help for my ECON homework

Week 2 assignment

Please submit your answers electronically (to your assignment folder). This assignment is worth 100 points.

Chapter 7: Measuring Domestic Output and National Income

1. GDP for a nation includes goods and services produced (within, outside) ________ its geographic boundaries. This condition means that the production of cars at a Toyota plant located in the United States would be (included, excluded) ________ in the calculation of U.S. GDP.

2. In measuring GDP, only (intermediate, final) ________ goods and services are included; if (intermediate, final) ________ goods and services were included, the accountant would be (over-, under-) ________stating GDP, or (single, multiple) ________ counting.

3. Personal consumption expenditures are the expenditures of households for goods such as automobiles, which are (durable, nondurable) ________, and goods such as food, which are (durable, nondurable) ________, plus expenditures for (housing, services) ________.

4. Gross private domestic investment basically includes the final purchases of (capital, consumer) ________ goods by businesses , all (construction of new, sales of existing) ________ buildings and houses, and changes in (services, inventories) ________.

5. An economy’s net exports equal its exports (minus, plus) ________ its imports. If exports are less than imports, net exports are (positive, negative) ________, but if exports are greate than imports, net exports are (positive, negative) ________.

6. Real GDP is calculated by dividing (the price index, nominal GDP) ________ by (the price index, nominal GDP) ________. The price index expressed in hundredths is calculated by dividing (real, nominal) ________ GDP by (real, nominal) ________ GDP.

7. GDP in an economy is $3452 billion. Consumer expendtiures are $2343 billion, government purchases are $865 billion, and gross investment is $379 billion. Net exports are

A. + $93 billion

B. + $123 billion

C. - $45 billion

D. - $135 billion

Questions 8 through 14 are based on the following chart

	Billions of dollars
Net private domestic investment	$32
Personal taxes	39
Transfer payments	19
Taxes on production and imports	8
Corporate income taxes	11
Personal consumption expenditures	217
Consumption of fixed capital	7
U.S. exports	15
Dividends	15
Government purchases	51
Net foreign factor income	0
Undistributed corporate profits	10
Social Security contributions	4
U.S. imports	17
Statistical discrepancy	0

8. Net exports are equal to

A. - $2 billion

B. $2 billion

C. - $32 billion

D. $32 billion

9. Gross private domestic investment is equal to

A. $32 billion

B. $39 billion

C. $45 billion

D. $56 billion

10. The gross domestic product is equal to

A. $298 billion

B. $302 billion

C. $317 billion

D. $305 billion

11. The net domestic product is equal to

A. $298 billion

B. $302 billion

C. $317 billion

D. $321 billion

12. National income is equal to

A. $245 billion

B. $278 billion

C. $298 billion

D. $310 billion

13. Personal income is equal to

A. $266 billion

B. $284 billion

C. $290 billion

D. $315 billion

14. Disposable income is equal to

A. $245 billion

B. $284 billion

C. $305 billion

D. $321 billion

15. Suppose nominal GDP rose from $500 billion to $600 billion while the GDP price index increased from 125 to 150. Real GDP

A. Was constant

B. Increased

C. Decreased

D. Cannot be calculated from these figures

16. Nominal GDP was $3774 billion in year 1 and the GDP deflator was 108 and nominal GDP was $3989 in year 2 and the GDP deflator that year was 112. What was real GDP in years 1 and 2, respectively?

A. $3339 billion and $3695 billion

B. $3494 billion and $3562 billion

C. $3595 billion and $3725 billion

D. $3643 billion and $3854 billion

Questions 17 through 20 are based on the following information and table.

The following table shows nominal GDP figures for three years and the prices indices for each of the three years. The GDP figures are in billions.

Year	Nominal GDP	Price index	Real GDP
1929	$104	121	?
1933	56	91	?
1939	91	100	?

17. Use the price indices to compute the real GDP in each year (you many round your answers to the nearest billion dollars).

18. While of the three years appears to be the base year?

19. Did the economy experience inflation or deflation between 1929 and 1933? Did the economy experience inflation or deflation between 1933 and 1939?

20. The price level fell by _______% from 1929 to 1933. The price level rose by ________% from 1933 to 1939.

21. What do government purchases include and what do they exclude?

22. How are imports and exports handled in GDP accounting?

Chapter 8: Economic Growth

23. Economic growth is best measured either by an increase in (nominal, real) _______ GDP over a time period or by an increase in (nominal, real) _______ GDP per capita over a time period. A rise in real GDP per capita (increases, decreases) _______ the standard of living and (increases, decreases) _______ the burden of scarcity in the economy.

24. Assume an economy has a real GDP of $3600 billion. If the growth rate is 5%, real GDP will increase by ($360, $180) _______ billion next year; but if the rate of growth is only 3%, the annual increase in real GDP will be ($54, $108) _______ billion. A two percentage point difference in the growth rate results in a ($72, $254) _______ billion difference in the annual increase in real GDP.

25. List the four supply factors in economic growth.

26. Real GDP of any economy in any year is equal to the quantity of labor employed (divided, multiplied) _______ by the productivity of labor. The quantity of labor is measured by the number of (businesses, hours of labor) _______. Productivity is equal to real GDP per (capita, worker-hour) _______.

27. An increase in labor productivity will (increase, decrease) _______ real output, real income, and real wages. Assuming an economy has an increase in labor productivity of 1.5%, it will take (28, 47) _______ years for its standard of living to double, but an increase in labor productivity of 2.5% annual will increase its standard of living in (28, 47) _______ years.

28. A supply factor in economic growth would be

A. An increase in the efficient use of resources

B. A decline in the rate of resource depletion

C. An improvement in the quality of labor

D. An increase in consumption spending

29. Which is a demand factor in economic growth?

A. An increase in the purchasing power of the economy

B. An increase in the economy’s stock of capital goods

C. More natural resources

D. Technological progress

30. Which concept would be associated with sustained and ongoing increases in living standards that can cause dramatic increases in the standard of living within less than a single human lifetime?

A. Increasing returns

B. Economies of scale

C. Growth accounting

D. Modern economic growth

31. Assume that an economy has 1000 workers, each working 2000 hours per year. If the average real output per worker-hour is $9, then total output or real GDP will be

A. $2 million

B. $9 million

C. $18 million

D. $24 million

32. What is the other major factor that, when combined with the growth of labor productivity, accounts for long-term economic growth in the United States?

A. An increase in government spending

B. An increase in the quantity of labor

C. A decrease in the interest rate

D. A decrease in personal taxes

33. Defenders of rapid economic growth say that it

A. Produces an equitable distribution of income

B. Creates common property resources

C. Leads to higher living standards

D. Spreads costs of development

34. A skeptic of the permanency of the increase in productivity growth would argue that it

A. Is based on learning by doing instead of infrastructure

B. Raises tax revenues collected by government

C. Lowers the natural rate of unemployment

D. Is based on a short-run trend

Questions 35 through 38 refer to the following information and table:

The table below shows the quantity of labor (measured in hours) and the productivity of labor (measured in real GDP per hour) in a hypothetical economy in three different years.

Year	Quantity of Labor	Productivity of Labor	Real GDP
1	1000	$100	?
2	1000	105	?
3	1100	105	?

35. Compute the economy’s real GDP in each of the three years.

36. Between years 1 and 2 the quantity of labor remained constant. By what percentage did the productivity of labor increase? By what percentage did real GDP increase?

37. Between years 2 and 3, the productivity of labor remained constant. By what percentage did the quantity of labor increase? By what percentage did real GDP increase?

38. What percentage did real GDP increase by between years 1 and 3?

39. Why is there an uneven distribution of economic growth?

40. Explain how economies of scale and resource allocation contribute to labor productivity.