EBK ESSENTIALS OF ECONOMICS
7th Edition
ISBN: 8220102452107
Author: Mankiw
Publisher: CENGAGE L
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Chapter 17, Problem 5QCMC
To determine
The effect of foreign investment.
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When the Japanese car maker Toyota expands one of its car factories in the United States, What is the likely impact of this event on the gross domestic product and gross national product of the United States?
a.GDP rises and GNP falls.
b.GNP rises and GDP falls.
c. GDP shows a larger increase than GNPĀ
d. GNP shows a larger increase than GDP
Consider how each of the following events is likely to affect real GDP. Do you think the change in real GDP reflects a similar change in economic well-being? a. Businesses and firms throughout the economy experience falling demand, causing them to lay off workers b. Government passes new environmental laws that prohibit firms from using production methods that emit large quantities of pollution.
Jane spends $1,200 on a used computer. How will this calculation effect GDP?
Ā
Ā
A.) Consumption will rise and GDP will rise
Ā
Ā
B.) Investment will rise and GDP will rise
Ā
Ā
C.) Since the good was not currently produced consumption will not rise, neither will GDP
Ā
Ā
D.) The GDP deflator will rise but not real GDP
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- Last year, a small nation with abundant forests cut down 200 worth of trees. It then turned 100 worth of trees into 150 worth of lumber. It used 100 worth of that lumber to produce $250 worth of bookshelves. Assuming the country produces no other outputs, and there are no other inputs used in producing trees, lumber, and bookshelves, what is this nations GDP? In other words, what is the value of the final goods the nation produced including trees, lumber and bookshelves?arrow_forwardExplain briefly whether each of the following would cause GDP to overstate or understate the degree of change in the broad standard of living. The environment becomes dirtier The crime rate declines A greater variety of goods become available to consumers Infant mortality declinesarrow_forwardIdentify the immediate effect of each of the following events on the U.S. GDP. List the affected component(s) of U.S. GDP for each situation if there is a change. Briefly explain the reasons if there is no change to GDP. Assume the person described by each event is an American citizen who works and lives in the U.S. Please notice that each following event is independent of one another. A. Linda pays the college tuition fee for her daughter. B. James receives a social security check from the US government. C. John buys a sports car which is made in Italy. D. Henry buys domestically produced machinery for his start-up construction business..arrow_forward
- The University of Chicago, a privately-owned school, is currently building a new hospital.Ā This will be classified in U.S. GDP as ________, because ____________. Group of answer choices A.consumption; it will provide medical services to consumers Ā B.net exports; most construction workers are foreigners Ā C.government purchases; the construction constitutes government expenditure Ā D.investment; it increases the capital stockarrow_forwardConsider the following data for a hypothetical economy that produces two goods, milk and honey. Prices Year 1 Year 2 Quantity Produced milk (litres) 100 135 honey (kg) 35 22 a. Compute nominal GDP for each year in this economy. Nominal GDP in year 1: $ Nominal GDP in year 2: $ milk ($/litre) 4 3 honey ($/kg) 3 4 (Round your response to the nearest whole number.) (Round your response to the nearest whole number.) The percentage change in nominal GDP from year 1 to year 2 is%. (Round your response to two decimal places. Use the minus sign to enter negative numbers.) b. Using year 1 as the base year, compute real GDP for each year using the traditional approach. Real GDP in year 1year 1 prices- $ Real GDP in year 2year 1 prices (Round your response to the nearest whole number.) (Round your response to the nearest whole number.) The GDP deflator in year 1year 1 prices The GDP deflator in vear? The percentage change in real GDP from year 1 to year 2 is%. (Round your response to two decimalā¦arrow_forward1.Ā What is GDP?Ā 2.Ā What is net export?Ā 3. What is the difference between Microeconomics and Macroeconomics?Ā Ā Ā 4. What is consumption?Ā Ā Ā 5.Ā What are investments? 6. Write the equation for GDParrow_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_forwardPlace the transactions below in their appropriate categories in the GDP and calculate the overall effect on the GDP of the United States. GDP = Consumption Expenditure + Investment + Government spending + Net Exports a. My total gasoline bill for a year ($1,500)Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā b. A Chinese citizen buys a U.S. government bond ($5,000)Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā c. A Landscaping firmās gasoline costs for a year ($2,500): Ā Ā Ā Ā Ā Ā d. A School district buys new uniforms for its basketball team ($1100)Ā Ā Ā Ā Ā Ā Ā Ā Ā e. I invest in a fidelity mutual fund ($2,000) Only answer dĀ and eĀ please please?arrow_forwardWhen the Japanese car maker Toyota expands one ofits car factories in the United States, what is the likelyimpact of this event on the gross domestic productand gross national product of the United States?a. GDP rises and GNP falls.b. GNP rises and GDP falls.c. GDP and GNP both rise but GDP rises by more.d. GDP and GNP both rise but GNP rises by more.arrow_forward
- Place the transactions below in their appropriate categories in the GDP and calculate the overall effect on the GDP of the United States. GDP = Consumption Expenditure + Investment + Government spending + Net Exports a. My total gasoline bill for a year ($1,500)Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā b. A Chinese citizen buys a U.S. government bond ($5,000)Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā c. A Landscaping firmās gasoline costs for a year ($2,500): Ā Ā Ā Ā Ā Ā d. A School district buys new uniforms for its basketball team ($1100)Ā Ā Ā Ā Ā Ā Ā Ā Ā e. I invest in a fidelity mutual fund ($2,000)arrow_forwardClassify each of the following items as a final good or service or an intermediate good orāĀ service, and identify which is a component of consumptionāĀ expenditure, investment, or government expenditure on goods and services. Ā A. AĀ textbookĀ boughtĀ byĀ aĀ student B. AĀ computerĀ purchasedĀ forĀ aĀ senator'sĀ office C. NewĀ carsĀ boughtĀ byĀ Hertz,Ā theĀ carĀ rentalĀ firm D. AluminumĀ sheetsĀ boughtĀ byĀ Boeing Ā 1. A is aĀ finalĀ goodĀ thatĀ isĀ consumptionĀ expenditureā, B is aĀ finalĀ goodĀ thatĀ isĀ governmentĀ expenditureā, C is aĀ finalĀ goodĀ thatĀ isĀ investmentā, and D is anĀ intermediateĀ good. Ā 2. A is aĀ finalĀ goodĀ thatĀ isĀ investmentā, B is anĀ intermediateĀ goodā, C is aĀ finalĀ goodĀ thatĀ isĀ investmentā, and D is anĀ intermediateĀ good. Ā 3. A is aĀ finalĀ goodĀ thatĀ isĀ consumptionĀ expenditureā, B is anĀ intermediateĀ goodā, C is aĀ finalĀ goodĀ thatĀ isĀ consumptionĀ expenditureā, and D is aĀ finalĀ goodĀ thatĀ isĀ investment. Ā 4. A is aĀ finalĀ goodĀ thatĀ isĀ consumptionĀ expenditureā, B is aĀ finalĀ goodā¦arrow_forward3. For each of the following events, what is the likely effect on GDP? a. an increase in government military spending due to the war in Ukraine b. Prostitution is made legal across the country. c. A miller sells flour to a baker. d. A miller sells flour to a final consumer. e. There is a large decline in the consumption of cigarettes. f. There is a large decline in the consumption of heroin. g. There is an increase in divorce rates.arrow_forward
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