Question

3. Which of the following transactions will be included in the U.S. GDP? If the transaction is included, identify into which category it fits. If the transaction is NOT included, tell why not. Fill in the blanks: yes or no? a. Nissan builds a new automobile plant in the U.S b. Delta Airlines sells one of its existing jets to Southwest. c. Ms. Moneybags buys existing shares of GM stock d. A California winery produces a case of Merlot and sells it to a customer in Canada. in which category or why not? An American buys a bottle of French perfume in Paris. е. General Motors produces too many cars for 2019. The cars do not sell this year, so the dealer adds f. the surplus cars to inventory. Define the labor force, employment, and unemployment. What is the key characteristic of people who are technically "unemployed" according to the Bureau of Labor Statistics? What is the opportunity cost of unemployment to the U.S. economy? How do discouraged workers, the marginally attached workers and the underemployed contribute to the unemployment statistic? What is the formula for the Unemployment rate? What is the consequence of a high Unemployment rate to the national growth rate? 4. 5. Describe the different kinds of unemployment according to their causes and duration: frictional, structural, cyclical and natural unemployment. 6. Draw the business cycle diagram. Identify 4 sections of the business cycle, the growth trend line, and the unemployment and inflation gaps. Describe what physical capital, human capital, technology, and natural resources contribute to long-run economic growth of aggregate output? Consider the contrasting cases of an advanced nation and a 7. developing nation. Questions for 15 points each. DO BOTH OF THEM. Round answers to 2 decimal points. 1. Plot the Productivity graph with the following data: $80,000 $50,000 $100,000 $75,000 Real GDP per worker Physical Capital per $125,000 $100,000 worker What other factors are held fixed? Does this country exhibit diminishing returns to physical capital per worker? Calculate the Marginal Products of Capital to prove your answer. Assume an increase in human capital doubles the output per worker at every level of capital. Draw the new Productivity curve on your diagram. a. b. 2. A student must purchase 2 Economics, 1 Accounting, and 1 Math textbook each year. With the following prices, calculate a price index number for each year, using 2017 as the base year. What is the percentage change in the price index from 2017 to 2018? What is the percentage change in the price index from 2018 to 2019? 2018 2019 2017 $200 $210 $220 Economics book $300 $275 $240 Accounting book $180 $200 $150 Math book Total expenditure СPI

Answer 1

a Gross Domestic Product (or GI DP) is the market valt value of all final goods and services produced within a country in a given period of time. The four main components of GDP are: consumption, investirent, government purthases and net exports lie, export - import). w Nissan buits builds a new automobile plant in the U.S: Yes. This would come under the category of Investment. Nissan building a new automobile plant in the US Is an example of foreign Direct Investment and sime this plant is built with u.s, it is part of U-s GDP. b) Delta Airlines sells one of its existing jets to Southwest : - No Wer This won't be a part of GDP, because GDP does not ato account for products that are produced earlier or goods and services that are second hand. 9 Ms. Moneybags buys existing shares of GM stock: NO - Investment, which is part of GDP, does not comprises the transactions that take place in the financial market inho Inwestenent here means inuestment in physical capitals. d) A California winery produces a case of Merlot and sells it to a customer in canada. Yes This would come under the category of Exports and heme Net Exports.

If a ti domestic citizen sells something that produced within the domestic country, in a given period of time to a foreign citizen, then it means that export has taken place, which is inde inturn a part of GDP. e An American buys a bottle of French Perfume in Paris: NO. This would come under the GDP accounting of France, sime, the bottle of perfine is not produced in u.s. A. General Motors produces too many ears for 2019. The cars do not sell this year, so the dealer adds the surplus cars to inventory: Yes This would come under the category of Investment In this case General Motors is adding the surplus care to it's inventory and here inventory investment is taking place. The surplus cases are final products which can be assumed to have been bought by General Motors itself.