Economics

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IE 3fB PART2 MacroeconomicAnalysis

Exercises

Teehnical Questions 1. Do government statisticians

ply adding up the total sales of in one year? Explain.

2. Evaluate whether oIJ of following are ered to be investment in calculating GDP.

a. The purchase new automobile for nonlrusiness

5.

6.

Is real GDP defined as "the value of aggregate out-

full emplo;rment"? Suppose an economy ces only two goods, cups of coffee Table 11.E1:

ons of milk, as_

expenditure good and the and real GDP 10, the base year.

this each of the three alter-

hrplain the between nominal GDP and real GDP in each ofthese cases.

Adding to Thble 11.1, if in 2007 real GDP was $13,206.4 billion and nominal GDP was $14,028.7 billion, calculate the percentage change foom 2006 b 2A07 in nominal GDP, real GDi and the price level. What is the value of the GDP deflator in 2407?

GDPbysim- firms

a.

b. b. The c. The

ofanew house of corporate

3. Exlplain transfer such as Social compensation, are

in calculating

t true that of U.S. imports is added exports w calculating U.S. GDP because

imports spending by Americans? E:rplain.

NominalVersus RealGDP

201 0

(The base year)

Expenditure 201 1 (Case 1)

Expenditure 201 1 (Case 2)

Expenditure 201 1 (Case 3)

Expenditure

COFFEE (CUPS) MILK (GALLONS) GDP (NOMINAL, REAL)

Price

s1.00

Price

51 .s0

Price

si.00

Price

$1.s0

Quantity

10

Quantity

10

Quantity

15

Quantity

15

Price

s2.00

Price

54.00

Price

52.00

Price

54.00

Quantity

20

Quantity

20

Quantity

40

Quantity

4A

Economics for Managers, Third Edition, by Paul G. Farnham. Published by Prentice Hall. Copyright O 2014 by Pearson Education, lnc.

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