Question

41. Use the following information to answer the question: There are three firms in an economy: X, Y. and 2 3.200 worth of poods from firm Y and SJ00 worth goods from firm Z, and produces 250 units of output st 54 Firmy buys $150 worth goods from firm X, and $250 worth goods form firm Zand produces 300 units of our per unit. Firm buys 575 worth goods from X, and $50 worth goods from firm Y, and produces 500 units at 52 Given this information, what is the economy's GDP? B. $2,700 C. $2,773 D $1,800 Basket of Goods 10 pairs jeans 12 flannel shirts 100 lbs.apples 80 lbs. oranges Prices 2013 2014 $20.00/pr $25.00/pr 15.00/shirt 20.00/shirt 0.80/1b. 1.05/1b. 1.00/lb. 1.00ib. IF 2014 is the base year, what is the price index in 2013? A. 80. B 100 C. 125. D. 140. 43. In 2008, U.S. GNP exceeded U.S. GDP by approximately $133 billion. This implies that: A. U.S. factor income earned abroad exceeded foreign factor income by $133 billion. B.U.S. factor income earned abroad was $133 billion less than foreign factor income. C.U.S. depreciation was $133 billion. D. U.S. depreciation was -$133 billion. 44. When Classical economists of the 1930s looked at the Great Depression, they: A. lacked a good explanation of why it was happening. B. blamed it on the inherent instability of the market. C. blamed it on activist fiscal and monetary policies. D. thought it was a result of prices adjusting too quickly. 45. In 2008, gross investment was $2,593 billion and net investment was $873 billion; therefore depreciation was A. $873 billion. B. $1,720 billion. C. $2,593 billion. D. $3,466 billion.

Answer 1

42.

A

working note:

Value of basket in 2013 = 20*10 + 15*12 + .8*100 + 1*80 = $540

Value of basket in 2014 = 25*10 + 20*12 + 1.05*100 + 1*80 = $675

So,

Price index in 2013 = (540/675)*100

Price index in 2013 = 80

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43.

A

GNP considers net factor income also that is $133 billion, so GNP increases GDP by $133 billion.

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44.

A

Classical economists did not explain it, causing recession to turn into the great depression.

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45.

B

Working note:

Depreciation = 2593-873 = $1720 Billion

Question 41 has some parts not clear, so cannot be answered.