I need help for my ECON homework

Assignment 2 answers

1. Within, included

2. Final, intermediate, over, multiple

3. Durable, nondurable, services

4. Capital, construction of new, inventories

5. Minus, negative, positive

6. Nominal GDP, the price index, nominal, real

7. D

8. A (net exports = exports – imports)

9. B (GPDI= NPDI + consumption of fixed capital)

10. D (GDP= PCE + GPDI + Government purchases +net exports)

11. A (NDP= GDP- consumption of fixed capital)

12. C (NI= NDP – statistical discrepancy + net foreign factor income)

13. B (PI=NI + transfer payments –taxes on production and imports- corporate income taxes – undistributed corporate profits – social security contributions)

14. A (DI= PI- personal taxes)

15. A

16. B

17. 86, 62, 91 (example: $104/1.21= 86).

18. 1939 (price index is 100)

19. Deflation, inflation

20. 24.8, 9.9 (example: (.91-1.21)/1.21 *100%= -24.8%). This can also be looked at simply as (new number-old number)/old number *100%.

21. Government purchases include all government expenditures (both goods and services that government consumes in providing public services and expenditures for publicly owned capital) on final goods and all direct purchases of resources, including labor. It does not include government transfer payments, because they merely transfer government receipts to certain households and generate no production of any sort.

22. The value of exports is added to GDP calculations, since by definition exports are goods and services produced within the borders of the United States. Imports are subtracted from GDP calculations. Not all personal consumption expenditures, gross private domestic investment, and government purchases are spent on domestically produced goods and services, so import spending must be subtracted from this total.

23. Real, real, increases, decreases

24. $180, $108, $72

25. (any order) a. Quantity and quality of natural resources b. Quantity and quality of human resources c. The supply or stock of capital goods d. Technology

26. Multiplied, hours of labor, worker-hour

27. Increase, 47, 28

28. C

29. A

30. D

31. C

32. B

33. C

34. D

35. 100,000; 105,000; 115,500

36. 5, 5 (new productivity of labor is 105 and old productivity of labor is 100. Therefore, the change is (105-100)/100*100%= 5%. New GDP is 105,000 and old GDP is 100,000, so the change is (105,000-100,000)/100,000*100%=5%)

37. 10, 10 (New quantity of labor is 1100 and old quantity of labor is 1000. Therefore, the change is (1100-1000)/1000*100%= 10%. New GDP is 115,500 and old GDP is 105,000, so the change is (115,500-105,000)/105,000*100%= 10%)

38. 15.5 (The new GDP is 115,500 and the old GDP is 100,000. The change is (115,500-100,000)/100,000*100%= 15.5%)

39. The different starting dates for modern economic growth in various parts of the world are the main cause in the vast differences in per capita GDP levels among rich and poor countries. There is a huge divergence in living standards among these same countries. While the western world’s period of modern economic growth is often dated to the onset of the Industrial Revolution in 1776, other parts of the world began industrialization, and therefore modern economic growth, much later.

40. Economies of scale: reductions in per-unit production costs result from increases in output levels. As firms expand their size, they are able to use larger, more productive equipment and employ methods of manufacturing and delivery that increase productivity. Research and development costs are more easily recouped.

Resource allocation: Workers over time have moved from low-productivity employment to high-productivity employment (for example, agriculture to manufacturing, or more recently manufacturing to software, pharmaceuticals, etc). Liberalized international trade agreements have also improved resource allocation, rather than allocation resources to relatively unproductive enterprises.