What happens to disposable personal income if tax rates increased?How could nominal GDP increase but real GDP remain the same?Which is a better indicator of growth in job opportunities: an increase in nominal GDP or real GDP?Is it possible for real GDP to increase and there to be no increase in employment?Determine the effect on GDP for the following.a. Consumption increases.b. Government spending falls.

What happens to disposable personal income if tax rates increased? How could nominal GDP increase but real GDP remain the same? Which is a better indicator of growth in job opportunities: an increase in nominal GDP or real GDP?

What happens to disposable personal income if tax rates increased? How could nominal GDP increase but real GDP remain the same? Which is a better indicator of growth in job opportunities: an increase in nominal GDP or real GDP?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter15: Gross Domestic Product

Section: Chapter Questions

Problem 12SQP

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Question

What happens to disposable personal income if tax rates increased?
How could nominal GDP increase but real GDP remain the same?
Which is a better indicator of growth in job opportunities: an increase in nominal GDP or real GDP?
Is it possible for real GDP to increase and there to be no increase in employment?
Determine the effect on GDP for the following.

a. Consumption increases.
b. Government spending falls.

Definition Video Definition Overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period. Video

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Consider how each of the following events is likely to affect real GDP. Do you think the change in real GDP reflects a similar change in economic well-being? a. Businesses and firms throughout the economy experience falling demand, causing them to lay off workers b. Government passes new environmental laws that prohibit firms from using production methods that emit large quantities of pollution.
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From March 2003 until October 2007 the S & P stock index, a broad measure of stock market prices, almost doubled. In addition, during the early 2000's U.S. Home Prices rose continuously until they peaked in March of 2006. Both home prices and the stock market declined from 2006 until March 2009 when both started to climb. How do you think the movement in home prices affected GDP? What was the impact of both on consumer spending? What role did interest rates play in the expansion of both the stock market and the housing market?
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Why do economists use real GDP rather than nominal GDP to gauge economic well-being? Define "Real" and "Nominal" GDP and explain the differences between them (Real and Nominal GDP).
Use the following information to answer this question. If nominal GDP rises from $100 trillion to $120 trillion, while the GDP deflator rises from 2.0 to 2.2, the percentage change in real GDP is approximately equal to A) -10%. B) 10%. C) 20%. D) 9.1%. E) 0%.