1. How do we know that calculating GDP by the expenditure approach yields the sameanswer as calculating GDP by the income approach?2. During 2002, real GDP in Japan rose about 1.3 percent. During the same period, retailsales in Japan fell 1.8 percent in real terms. What are some possible explanations forretail sales to consumers falling when GDP rises? (Hint: Think of the composition ofGDP using the expenditure approach.)

Answered: 1. How do we know that calculating GDP…

1. How do we know that calculating GDP by the expenditure approach yields the same answer as calculating GDP by the income approach?

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 4.8P

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Factor Models

Many attributes might be related to an asset's risk, including market capitalization (size), dividend yield, growth, price-earnings ratio, etc. The use of these traditional descriptors, however, presents a few problems:

Question

1. How do we know that calculating GDP by the expenditure approach yields the same
answer as calculating GDP by the income approach?
2. During 2002, real GDP in Japan rose about 1.3 percent. During the same period, retail
sales in Japan fell 1.8 percent in real terms. What are some possible explanations for
retail sales to consumers falling when GDP rises? (Hint: Think of the composition of
GDP using the expenditure approach.)

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