Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
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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- Which of the following are included in GDP calculations? a. Cleaning services performed by Molly Maid Corporation b. Lawn-mowing services performed by a neighborhood child c. Drugs sold illegally on a local street comer d. Prescription drugs manufactured in the United States and sold at a local pharmacy e. A rug woven by hand in Turkey f. Air pollution that diminishes the quality of the air you breathe g. Toxic-waste cleanup performed by a local company h. Car parts manufactured in the United States for a car assembled in Mexico i. A purchase of 1,000 shares of IBM stock j. Monthly Social Security payments received by a retireearrow_forwardGDP is a good and useful measure of general economic activity for each of the following reasons except for which one? (Which one of the following is not either correct or a reason to rely on GDP as a measure of economic activity?) In order to raise the amount of goods and services available in a country, GDP must rise. In order to have a true measure of economic activity, the income of all people needs to be considered, and the value of goods and services for all people must be considered, and GDP considers the income and spending for all people (in the country). The total value of GDP is lower if the distribution of income is lower and less equitable, and is higher if the distribution is higher and more equitable, and this makes GDP a good indicator of aggregate economic activity. In order to raise the income of some people, and have the income of no people go down, GDP must rise. People care about their income, and GDP is a measure of total income.arrow_forwardAre the following included in US GDP? Briefly explain your answer. Used textbooks sold at your college bookstore Use books sold at a garage sale Cars made in the United States at a Toyota factory Cars made in Germany at a General Motors factory The price paid by an American tourist staying at a French hotel The price paid by a German tourist staying at a New York hotelarrow_forward
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