Macroeconomics: Private and Public Choice
15th Edition
ISBN: 9781305176799
Author: Gwartney
Publisher: Cengage
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Question
Chapter 7, Problem 11CQ
(a)
To determine
Explain the statement of inventory investment.
(b)
To determine
Explain the statement of net investment.
(c)
To determine
Explain the statement of increase in
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Students have asked these similar questions
does a household purchase of a home built in 1985 affect GDP?
Which of the following transactions should or should not be counted in GDP?
Answer Yes or No and briefly explain your answer. Answers without explanation will not be considered
in grading, even if they are correct.
a. You buy a pair of new cowboy boots on a trip to Texas
b. You buy a pair of vintage cowboy boots from your cousin in El Paso
c. A cat burglar sells $10,000 of stolen jewelry to a fence
d. Amazon issues $1 billion worth of new shares
e. GM purchases $100 million worth of tires from Firestone
f. A private company builds a new road in Memphis Y
g. Stay-at-home parents provide an estimated $500 million of child care services
Are the following included in US GDP? Briefly explain your answer.
Used textbooks sold at your college bookstore
Use books sold at a garage sale
Cars made in the United States at a Toyota factory
Cars made in Germany at a General Motors factory
The price paid by an American tourist staying at a French hotel
The price paid by a German tourist staying at a New York hotel
Chapter 7 Solutions
Macroeconomics: Private and Public Choice
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Similar questions
- Which of the following are included in GDP calculations? a. Cleaning services performed by Molly Maid Corporation b. Lawn-mowing services performed by a neighborhood child c. Drugs sold illegally on a local street comer d. Prescription drugs manufactured in the United States and sold at a local pharmacy e. A rug woven by hand in Turkey f. Air pollution that diminishes the quality of the air you breathe g. Toxic-waste cleanup performed by a local company h. Car parts manufactured in the United States for a car assembled in Mexico i. A purchase of 1,000 shares of IBM stock j. Monthly Social Security payments received by a retireearrow_forwardYou just bought an old car a couple years ago for $1,000 and put about $5,000 of parts and labor into improving it. You sold it yesterday for $3,000. How does this sale affect GDP?arrow_forwardWhat's the difference between GDP and GNP ?arrow_forward
- 1) How do the following events influence Turkish GDP? Mothers living in Turkey take care of their pre-school child in their own home. You buy a new car from a dealer for 80,000 TL. You sell your father’s used car to a dealer for 70,000 TL. You sell your old car to a dealer for 60,000 TL. The dealer repaints it and sells it to a customer for 80,000 TL A Japanese company builds a factory in Düzce. (If this affects GDP, is it the Japanese or the Turkish GDP?) A German company buys stock in a Turkish company. An earthquake destroys many structures in Gebze industrial zone. The structures are not rebuilt this year. An earthquake destroys much of Gölcük and within a short time the town is rebuilt as it was before.arrow_forwardWhat components of GDP (if any) would each of the following transactions affect? Explain. Uncle Tom buys a new refrigerator from a domestic manufacturer. Sidd buys a new house from a local builder. The Aladin family buys an old Victorian house from the Disney family. You pay a hairdresser for a haircut. Ford sells a Mustang from its inventory to the Cernogratz family. Ford manufactures a Focus and sells it to Avis, the car rental company. California hires workers to repave Highway 101. The federal government sends your grandfather a Social Security check. Honda expands its factory in Larkana.arrow_forwardSuppose a group of British investors finances the construction of a plant to manufacture skateboards in St. Louis, Missouri. How will the construction of the plant affect GDP? Suppose the plant generates $100,000 in corporate profits this year. Will these profits contribute to GDP? Why or why not?arrow_forward
- Which of the following statements best describe how economists calculate GDP? Group of answer choices Economists at the Census bureau collect data from surveys sent to consumers, private firms and government agencies and add them up on a yearly basis. Economists at the Bureau of Economic Analysis pull together data on sales, imports, exports, government purchase and investments from various government sources every 3 months. Economists at the Bureau of Labor Statistics collect data from surveys sent to consumers, private firms and government agencies and add them up every 3 months. Economists at the Congressional Budget Office calculate GDP for a given year by adjusting the previous year’s GDP with inflation.arrow_forwardWhich of the following would NOT be included in GDP? US manufacturer making goods in EuropeFinal goods and servicesGoods and services produced during the current yearToyota manufacturing cars in Tennesseearrow_forwardWhich of the following transactions or activities would be counted in your country’s GDP? Explain your answers. A transportation company acquires a fleet of second-hand vehicles. The same transportation company acquires 1.000 gallons of gas from a foreign company deducted from the net export component of GDP. You buy 10 short-term government bonds. A mining company acquires new government licenses to drill in land the company already owns. You pay for a new haircut at your local hairdresser. Foreign residents buy a bundle of your country’s food specialties on an online retail site. Your parents spend a whole day cooking meals to be handed out to their poorer neighbors. The local government acquires furniture for newly built schools. Two telecommunications companies merge. A non-profit organization buys an apartment to lodge their headquarters.arrow_forward
- Tom is an organic gardener. For several years, he produced only for his own consumption. Last year, he sold his vegetables on Amazon directly to consumers. This year, he sold all of his vegetables to a company producing organic vegetable soup. When is the value of Tom’s vegetables included in GDP? Select one: a. None of his production is included in GDP, since it is considered home production. b. Only when he sells his vegetable on Amazon (BLS is able to see this transaction) c. When he sells his vegetables at the farmer's market and when he sells the vegetables to the organic soup company. d. Only when he sells his vegetables to the organic soup company.arrow_forwardWhat can you analyse from the aspects regarding GDP?arrow_forward
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