PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Chapter 5, Problem 1RQ
To determine
Use of market value while calculating
Expert Solution & Answer
Explanation of Solution
The gross domestic product is the summation of the market value of all the final goods and services produced within the economy in a financial year. There will be a wide variety of goods and services produced in the economy such as apples, oranges, grapes, automobiles, electronic items and so on. Thus, adding them together will be an impossible task. This issue is handled through the use of aggregating the market values of each goods. This helps to aggregate the value and calculate the GDP value of the economy. This is the reason why the economists use the market values to calculate the GDP.
The weight giving process for the high valued commodities than the low valued commodities is because of the fact of the consumer preferences. The price of each item is a measure of the value that it purchasers place on it. Higher valued goods place higher worth than the low priced commodity. This is the rationale behind giving higher weight for the higher priced commodities by the economists.
Economics Concept Introduction
Gross Domestic Product: The Gross Domestic Product (GDP) is the sum total of the money value of all the final goods and services produced within the economy in a given period of time, which is usually a financial year.
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You are a junior executive of a new cellular phone carrier called Technologies of the Future (TOF) that competes in the same market as Verizon Wireless, AT&T, and T-Mobile. You are asked to write a professional document that discusses the concepts below. Define Gross Domestic Product (GDP). Differentiate between Real GDP and Nominal GDP. Explain how the GDP of the U.S. may influence the sale of smartphones by TOF. What percentage of the GDP is attributed to the sale of cellular phones (including carrier services) in the United States? Define the Human Development Index (HDI). Explain if the HDI has an influence on the sale of smartphones in the U.S. Which aspect of the HDI might influence the sale of smartphones? Identify the target audience for the sale of smartphones in the U.S..
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The gross domestic product (GDP) of the United States is defined as
the market value of
all
final goods and services produced
within the United States
in a given period of
time.
Based on this definition, indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in
2020.
2020 GDP
Scenario
Included
Excluded
Fastlane, a Japanese automobile company, produces a sedan at a plant in Indiana on December 14, 2020. A family buys
the sedan on December 24.
Rotato, a U.S. tire company, produces a set of tires at a plant in Michigan on September 25, 2020. It sells the set of
tires to Speedmaster for use in the production of a two-door coupe that will be made in the United States in 2020.
(Note: Focus exclusively on whether production of the set of tires increases GDP directly, and ignore the effect of
production of the two-door coupe on GDP.)
You chop down a cherry tree on your property in California and make a dining room table in…
The gross domestic product (GDP) of the United States is defined as the
all
in a given period of time.
Based on this definition, indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in
2023.
Scenario
Generic Motor Company, a U.S. automobile company, produces a pickup truck at a manufacturing facility in Lordstown
on January 6, 2023. It sells the car at a dealership in Dallas on February 2, 2023.
Graincorp, a U.S. agricultural company, produces corn syrup at a plant in Iowa on September 25, 2023. It sells the corn
syrup to Crunchy's for use in the production of cereal that will be made in the United States in 2023. (Note: Focus
exclusively on whether production of the corn syrup increases GDP directly, and ignore the effect of production of the
cereal on GDP.)
Using wood from a red maple tree on your Michigan property you make a birdhouse in 2023. A similar birdhouse sells
for $55 in a craft store.
Sleepytown, a…
Chapter 5 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
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