Question

Problem set #1 October 2018 (1) rences Mailings Review View Help Tell me what you want to do 2) In the following situations, explain what is counted in this year's GDP A. You bought a new Wi at GameStop last year and resold it on eBay this year B. You spend your Saturday cutting grass at your house C. You purchase an Investing for Dummies book at Barnes and Noble D. You purchase a historic home using the services of a real estate agent E. You purchase a tire to replace the damaged tire on your car 3) To which component of GDP expenditure (C, I, G, or NX) does each of the following belong? a. a new home b. a parachute purchased by the US. Army c. wheat imported from Canada d. a cheeseburger you purchase for lunch 4) Many goods and services are illegally sold or legally sold but not reported to the provernment. How would increased efforts to count those goods and services affect our calculation of GDP? Would it increase, decrease or stay the same? Why? 5) Fill in the missing data in the following table: (Round to the nearest dollar) Year Nominal GDP Real GDP GDP Deflator 2009 2010 2011 2012 2013 100000 93 117000 120000 100 125000 150000 119 136 152000

Answer 1

Q.2. E...You purchase a tire to replace the damaged tire on your car.

(because all expenditures on second hand goods does not lead to addition to the current years GDP.It reflects only transfer of ownership)

Q.3..a. a new home-private final consumption expenditure.

b.a parachute purchased by army-Government final consumption expenditure.

c .year Nominal.GDP Real GDP GDP deflator.

2009 100000 107526.88 93

2010 117000 117000 100

2011 125000 120000 104

2012 150000 126050.42 119

2013 206720 152000 136

gdp deflator =Nominal gdp devided by real gdp multiplied by 100