Exploring Macroeconomics
8th Edition
ISBN: 9781544363332
Author: Robert L. Sexton
Publisher: Sage Publications
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Question
Chapter 11, Problem 7P
To determine
(a)
To explain:
Whether during the business cycle, the consumer non-durable or durable goods tend to change.
To determine
(b)
To explain:
The way consumer durables are similar to the investments.
To determine
(c)
To explain:
Whether there can be a negative value in a year for a fixed investment or an inventory.
To determine
(d)
To explain:
The reason behind all of the government spending is not considered as part of the
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what aspects of GDP are mostly affected when the economy slows down? and why?
a. The paradox of thrift is based on a circular flow of the economy in which current spending drives future spending. Explain the paradox of thrift.
b. Why do you think households’ purchase of new housing is included in the investment components of GDP rather than the consumption component?
c. What is the difference between GDP and GNP? Which one is the better measure of income? Why?
3. What is meant by potential GDP?
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- Country A has export sales of 20 billion, government purchases of 1,000 billion, business investment is 50 billion, imports are 40 billion, and consumption spending is 2,000 billion. What is the dollar value of GDP?arrow_forwardWhat is potential GDP?arrow_forwardAnswer these questions about GDP: a. Could next year’s real GDP exceed next year’s nominal GDP?b. Could real GDP grow at the same time that real GDP per capita falls?c. Could people’s real consumption possibilities expand at the same time that realGDP per capita falls?d. How does changing amount of leisure complicate comparisons of real well-beingover time?arrow_forward
- 1) Explain how GDP is used in the calculation of a recession or economic growth. What is a recession? How do you know whether an economy is growing or not? 2) Explain why intermediate goods are not counted in the calculation of GDP. What is an intermediate good?arrow_forward44. Which component of GDP will increase if disposable income increases? a. Government spending b. Investments c. Consumption d. Net exportsarrow_forwardFrom the expenditures approach, list and explain the components of GDP ? Example?arrow_forward
- i. Explain the difference between the term's nominal GDP and real GDP. ii. What is Malaysia's nominal GDP for the year 2020? iii. What is the Malaysia's real GDP for the year 2020?arrow_forwardPart A. What is the primary determinant of consumption? Part B. What are the four components of GDP? Which of the four components is the largest, and which is the smallest?arrow_forwardThe annual output and prices of a three-good economy are shown in the table below. Quantity of Gooda Tear 1 Quantity of Goods Year 2 Price Year 2 $ 5 Price Year 1 Good Quarts of ice crean Bottles of shanpoo Jars of peanut butter 6. 55 4. $4 2. $4 3. $ 2 $2 Instructions: Enter your answers as a whole number. a. What was the economy's nominal GDP in year 1? b. What was its nominal GDP in year 2?arrow_forward
- The Equivalence of Expenditure and Income (in Billions of Dollars) Expenditure C: Consumer goods and services I: Investment in plants, equipment, and inventory G: Government goods and services X: Exports M: Imports GDP: Total value of output b. Gross private investment % % c. Total government purchases % d. Exports e. Imports % $14,561 Instructions: Enter your responses as a percentage rounded to one decimal place. Calculate the following as a percentage of GDP for 2019: a. Personal consumption expenditures % 3,744 3,754 2,504 (3,136) $21,427 Wages and salaries Corporate profits Proprietors' income Income Rents Interest Taxes on output and imports Depreciation Statistical discrepancy Total value of income $11,434 2,075 1,658 778 645 1,494 3,463 (120) $21,427arrow_forwardHow will an increase in the amount of scholarships and pensions given by the government affect the level of GDP? a. Increase in the level of unemployment b. Increases the level of gross domestic capital formation c. No effect d. Increase in net exportsarrow_forward
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