PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Chapter 5, Problem 6P
To determine

Four components of the expenditure and the GDP of the economy.

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Because of the COVID-19 pandemic, several governments are enforcing social-distancing rules that brought the real estate market to a standstill. For instance, in Toronto, sale of existing (old) and newly built homes were down by approximately 40% in April 2020. Discuss how we account for this drop in sales in GDP calculation. (Assume that services from real estate agents are used for all home sales/purchases.)
You are discussing economic growth and the economic cycle with a group of colleagues in an effort to forecast the growth in an economy that is demonstrating an increase in investment, rising employment, and growing business confidence with slowly rising prices. Your discussion has encompassed the distinction between GDP and GNP and the importance of leading indicators for forecasting purposes. Based on this information, answer the following three questions. In national income accounting, what is the difference between gross domestic product (GDP) and gross national product (GNP)? GNP equals GDP plus domestic production/earnings by foreign companies/citizens ,minus foreign production/earnings by domestic companies/citizens GNP equals GDP plus foreign production/earnings by domestic companies/citizens, minus domestic production/earnings by foreign companies/citizens GNP equals GDP plus imports minus exports GNP equals GDP minus government spending minus exports plus imports.
A U.S.-owned automobile factory uses $50 million worth of materials produced in the U.S. and $10 million worth of material purchased from foreign countries to produce $100 million of automobiles. $70 million worth of these automobiles are purchased by U.S. consumers, $25 million are sold in foreign countries, and $5 million are added to inventory. How much of this production is included in U.S. GDP? By how much do these transactions alone affect U.S. net exports?
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