MT445 A7

Unit 7

[MT445 | Managerial Economics]

Assignment: GDP and Economic Growth

Student Name:

In this Assignment, you will evaluate the various components of the Gross Domestic Product (GDP) and factors that affect the GDP components. You will also compute the growth rate of U.S. real GDP and compare the average with the expected growth rate of U.S real GDP.

Instructions: Answer all of the following questions. You are required to follow proper APA format. Read the Criteria section below for more information before you begin this Assignment.

In this Assignment, you will be assessed on the following outcome:

MT445-6: Evaluate the effects of globalization and international trade on the U.S. economy.

Why does inflation make nominal GDP a poor measure of the increase in total production?

Which component of GDP will be affected by each of the following transactions involving FlyCheap Airlines? Briefly explain.

Hint: GDP = C + I + G + Nx

i. You purchase a ticket on a FlyCheap Airlines to visit your niece.

ii. FlyCheap Airlines purchases a new jetliner from Boeing.

iii. FlyCheap Airlines purchases new seats to be installed on a jetliner it already owns.

iv. FlyCheap Airlines purchases 200 million gallons of fuel.

v. A French citizen purchases a ticket to fly on a FlyCheap flight from Paris to New York.

vi. The city of Nashville agrees to spend funds to extend one of the runways so that FlyCheap will be able to land larger jets.

Use the table to answer the following questions.

Year	Real GDP (Billions of 2000 Dollars)
1993	$7,113
1994	7,101
1995	7,337
1996	7,533
1997	7,836

i. Calculate the growth rate of real GDP for each year from 1993-1994, 1994-1995, 1995-1996 and 1996-1997. Show your work.

ii. Calculate the average annual growth rate of real GDP for the period from 1993 to 1997.

Hint: Compute the average for the growth you calculated under (i) above.

iii. How does the average annual growth rate you calculated in (ii) above compare to the average GDP growth rate the U.S. normally expects?

In an open economy, trade is allowed between countries. Assume a consumer purchases $1,000 worth of furniture manufactured in China. Answer the following:

a. Which component(s) of GDP are impacted by this purchase?

b. Does GDP increase, decrease or stay the same? Briefly explain.

c. Does your answer change if the company in China is a U.S. owned company? Why?

Describe the relationship between labor productivity and long term economic growth. How do technological advancements impact labor productivity?

Criteria

· This Assignment should be written in Standard English and demonstrate exceptional content, organization, style, and grammar and mechanics.

· Respond to the questions in a thorough manner, providing specific examples where asked.

· Your sources and content should follow proper APA format (A title page is not required). (Review the APA formats found in the Kaplan Writing Center. To access the Kaplan Writing Center, select this link .).

· Review the grading Rubric to ensure all points have been captured in the paper.

References (add references in APA format below)

Directions for Submitting your Assignment

Complete your Assignment in this Word document. Submit your Assignment by the end of Unit 1 by clicking the Dropbox tab and select Unit 1: Assignment from the dropdown menu, then attach your file. Make sure to save a copy of your work and be sure to confirm that your file uploaded correctly.

Unit 7 Assignment
Content and Analysis	Points Possible	Points Earned
Problem #1 Why does inflation make nominal GDP a poor measure of the increase in total production?	7
Problem #2 Which component of GDP will be affected by each of the following transactions involving FlyCheap Airlines? If you do not believe any component will be affected, briefly explain why. (i. – vi.)	12
Problem #3 Use the table to answer the following questions (i. – iii.).	6
Problem #4 In an open economy, trade is allowed between countries. Assume a consumer purchases $1,000 worth of furniture manufactured in China. Answer the following (a – c).	6
Problem #5 Describe the relationship between labor productivity and growth? How do technological advancements impact labor productivity?	8
Writing style, grammar, and APA format.	6
Total	45

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