Question

Chapter 7 10. Defin production. How are net exports negative amount. e net exports. Explain how U.S. exports and imports each affect domestic determined? Explain how net exports might be a 11. Contrast other for comparing changes in the standard of living over a the ideas of nominal GDP and real GDP. Why is one more reliable than the series of years? What is the price index and what is its role in differentiating nominal GDP and real GDP? 12. Which of the following are included or excluded in this year's GDP? Explain your answer in each case. a. Interest received on an AT&T corporate bond. b. Social Security payments received by a retired factory worker. e. Unpaid services of a family member in painting the family home. d. Income of a dentist from the dental services provided. e. A monthly allowance a college student receives from home. f. Money received by Josh when he resells his nearly brand-new Honda automobile to Kim. g. The publication and sale of a new college textbook. h. An increase in leisure resulting from a 2-hour decrease in the length of the workweek, with no reduction in pay i. A $2 billion increase in business inventories. j. The purchase of 100 shares of Google common stock.

Answer 1

Ans 10) Net exports refers to the difference between total exports and imports of the counrty during one fiscal year.

Higher exports by US induces them to produce more on the domestic country and thus enhances production.

On the other side, More dependency on imported goods reduces the demand of domestic products. Therefore, if the exess of output produced is exported, then it will not impact the domestic production.

Net exports can be negative if the exports of the country during a fiscal year is greater than its imports.

Ans 11) Nominal GDP refers to the GDP calculate at the prices of the current year whereas real GDP refers to the GDP calculated at the prices of the Base year.

The GDP deflator is a measure of the price level of all finished goods and services produced in the domestic economy in one year.

Real GDP is a better indicator of GDP as it is not affected by the changes of price of the goods and services over various years.

Ans 12)

a) Included as a prt of operating surplus

b) Included as a part compensation of employees

c) Not included as it is non montary exchange

d) included as mixed income of the self employed

e) Not included as it is a transfer payment

f)not included as it is a sale of second hand good

g) included as operating surplus

h) not included as it is a non monetary exchange

i) Included as gross domestic capital formation

j) not included as it is a transfer of title