Macroeconomics
Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Chapter 2, Problem 10PA
To determine

Whether the speech of the senator is acceptable or not.

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Suppose that a farmer grows wheat, which she sells to a miller for $10. The miller turns the wheat into flour, which she sells to a baker for $55. The baker turns the wheat into bread, which she sells to consumers for $140. Consumers eat the bread. What is GDP in this economy? Consider the following table showing the breakdown of GDP (in billions) for China. GDP Category Amount (in billions) Consumption 1700 Investment 700 Government Expenditure 100 Exports 50 Imports 40   Using the expenditure approach, calculate GDP for China.
Last year, a small nation with abundant forests cut down $200 worth of trees. It then turned $100 worth of trees into $150 worth of lumber. It used $100 worth of that lumber to produce $250 worth of bookshelves. Assuming the country produces no other outputs, and there are no other inputs used in producing trees, lumber, and bookshelves, what is this nation's GDP? In other words, what is the value of the final goods the nation produced including trees, lumber and bookshelves?
"You sell your car to a friend for $2,000 so you can buy a new car. Is this sale value included in GDP? Why or why not?"
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