Question

c. the purchase of stocks, bonds, or mutual funds. d. All of the above are correct. 48. Henry buys a bond issued by Ralston Purina, which uses the funds to buy new machinery for one of its factories. a. Henry and Ralston Purina are both investing. b. Henry and Ralston Purina are both saving. c. Henry is investing: Ralston Purina is saving. d. Henry is saving: Ralston Purina is investing. 49. Which of the following is not included in GDP? a. unpaid cleaning and maintenance of houses b. services such as those provided by lawyers and hair stylists c. the estimated rental value of owner-occupied housing d. production of foreign citizens living in the United States 50. Which of the following is correct? a. The value of all intermediate goods and final goods are included in GDP. b. The value of intermediate goods are included in GDP only if they were produced in the previous year. c. The value of intermediate goods are included in GDP only if they are purchased by firms rather than households. d. The value of intermediate goods are not included in GDP. 51. Unemployment compensation is a. part of GDP because it represents income. b. not part of GDP because it is a transfer payment. c. part of GDP because the recipients must have worked in the past to qualify. d. not part of GDP because the payments reduce business profits. Table 1: Budget Scenarios - Full Employment Equilibrium The following is a list of national income (Sbi.) figures for 2008: Net exports [Exports(X)-Imports(M)]=[NX]=(1000-2000) Personal consumption expenditures (C) Gross private domestic investment Planned (Ip) Government purchases (G) Personal H.H. saving (Sp) Consolidated public sector budget (T-G) - 1000 10,000 3,800 3,200 800 Balanced Use the information in the table above to answer the next five questions. Also, assume that the equilibrium level of GDP is 16,000. 52. GDP through the expenditures approach is equal to: a. [10,000+3,800+3,200-1000). [10,000+3,800+3,200+1000). (10,000+3,800+3,200-800). Cannot be determined on the basis of the information given. b.

Answer 1

Answer to first 4 questions provided as per HOMEWORKLIB RULES :

1) Investing is buying assets such as stocks, bonds, mutual funds or real estate with the expectation that your investment will make money for you . a) Both investing .

2)  Owner occupied residences have an imputed rent, which is added to GDP, even though the homes are not actually rented out . Services are part of GDP . Production of foreign citizens within boundary are included in GDP . But unpaid cleaning is not included as it does not produce any good or service in market . Answer : a) unpaid cleaning and maintenance of houses .

3) GDP is only sum of value of final goods and services . This avoids double counting problem . Answer : d) The value of intermediate goods are not included in GDP

4) Transfer payments and welfare expenditures are not included in GDP . Answer : b) Not part of GDP because it is a transfer payments .