Question

4. [Gross Domestic Product] a. List and describe the components of Gross Domestic Product on the supply side. Be sure to account for the relative size of each component within the total GDP. b. What is the formula for measurement on the demand side of GDP? Be sure to include a brief definition of each of the formula components and the proper nomenclature. c. When comparing the GDP of different countries, two issues immediately arise. What are these issues and how does one account for these while comparing the GDP for different countries? d. If you compare the change in GDP to the change in per capita GDP, which would you expect to be larger? Why? 5. [Growth Rate] a. An economy starts off with a per capita GDP of 16,000 euros. How large will the per capita GDP be if it grows at an annual rate of 3% for 10 years? How large will the per capita GDP be 3% for 30 years? How large will the per capita GDP be 6% for 30 years? b. Assume that the average worker in Canada has productivity of $33 per hour while the average worker in the United Kingdom has productivity of $29 per hour (both measured in U.S. dollars). Over the next six years, say that worker productivity in Canada grows at 1% per year while worker productivity in the UK grows 3% per year. At that point, who will have the higher productivity level, and by how much?

[Gross Domestic Product]

a. List and describe the components of Gross Domestic Product on the supply side. Be sure to account for the relative size of each component within the total GDP.

b. What is the formula for measurement on the demand side of GDP? Be sure to include a brief definition of each of the formula components and the proper nomenclature.

c. When comparing the GDP of different countries, two issues immediately arise. What are these issues and how does one account for these while comparing the GDP for different countries?

d. If you compare the change in GDP to the change in per capita GDP, which would you expect to be larger? Why?

Answer 1

I wil answer only Q4 as per HOMEWORKLIB POLICY. Kindly respect HOMEWORKLIB RULES as this is the rule.

4a)Components of GDP on the demand side are consumer spending (consumption).business spending (investment),government spending on goods and services,spending on net exports.Components of GDP on the supply side are durable goods, nondurable goods,services , structures, and inventories.Goods which arw not for immediate consimption are durable goods.Eg television,Non durable goods are meant for immediate consumption. Egfood items.Services include supply for public need such as transport, communication ,electricity, water etc.Inventories are goodsin stock.

Size of the components in GDP are durable goods 16.1%,non durable 13.4%,services 62.4%,structures 8.1%,inventories 0%, Total GDP is 100%.

b)Main components for measuring GDP on the demand side are consumer spending (consumption C).business spending (investment I),government spending on goods and servicesG,spending on net exportsX-M.Formula is ,GDP=C+I=G+X-M.Consumption by households is the largest component of GDPand account for two thirds of GDP in a year.Investment refers to business purchase of plants and equioments accounting to 15-18%of GDP..Government expenditure are on infrastructure like roads and bridges and account for 20% of GDP.Net exports is exports minus imports and exports account for 11.8% and imports account for-14.5%.

c)GDP of acountry is measured in its own currency.Eg US uses dollars , Europe uses Euros etc. So the currency need to be converted into a common currency. Secondly,number of population is different in different countries .We need to divide GDP by population in order to derive the standard of living in different countries.

d)GDP measures the volume of goods and services in the economy and per capita GDP is GDP divided by population.GDP is larger because GDP per capita varies with size of population.