CNM ECON2200 - To calculate GDP using the expenditures
Question # 00487734
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Updated on: 02/20/2017 06:09 AM Due on: 02/20/2017
Homework – Chapter 7
A. 1. To calculate GDP using the expenditures (aggregate spending) approach which of the following would be
included (pick all that apply – there will be more than one)?
a.
b.
c.
d.
e.
f. Consumer spending
Exports
Government purchases
Imports
Interest
Investment spending g.
h.
i.
j.
k. Private savings
Profit
Rent
Taxes
Wages 2. Using the expenditure approach, GDP in the economy shown above is equal to:
______ + _____ + _____ + _____ - _____ = GDP
Fill the blanks with the letters used in the text and notes to abbreviate each of the items you chose in Question
1. (Not the letters used for choices in Q1.)
For this economy, using the expenditures approach, GDP would equal $ __________ .
3. To calculate GDP using the income approach which of the following would be included (pick all that apply)?
a.
b.
c.
d.
e.
f.
m.
n.
o.
p.
q.
r. Consumer spending
Exports
Government purchases
Imports
Interest
Investment spending g.
h.
i.
j.
k.
l. Private savings
Profit
Rent
Taxes
Wages 4. Using the income method, GDP in the economy shown above would equal $__________ .
5. Net exports equal $ __________ .
Disposable income equals $ __________ . s.
t.
u. 6. How does the government shown in the circular flow diagram above finance its purchases of goods
and services (select all that apply)?
v.
a. Consumer spending
g. Private savings
b. Exports
h. Profit
c. Government purchases
i. Rent
d. Imports
j. Taxes
e. Interest
k. Wages
f. Investment spending
l.
m.
n.
o. B. Would each of the following transactions be included in GDP for the United States? Why or why
not?
p. Put yes or no in the first blank and the letter for the reason (from the choices given below) in the
second blank for questions 7 - 12.
q.
a. It is consumption
c. It is a purely financial
e. It is an export and is
spending.
transaction.
added to GDP.
b. It is investment
d. It was not produced this
f. It is an import and is
spending.
year.
subtracted from GDP.
r. s.
t. 7. Coca-Cola builds a new bottling plant in the United States. (yes, no) __________ because
__________ u.
v. 8. Delta sells one of its existing airplanes to Korean Air. (yes, no) __________ because __________
w.
x. 9. Ms. Moneybags buys an existing share of Disney stock. (yes, no) __________ because
__________
y.
z. 10. A California winery produces a bottle of Chardonnay and sells it to a customer in Montreal,
Canada.
aa.
(yes, no) __________ because __________
ab.
ac. 11. An American buys a bottle of French perfume in Tulsa. (yes, no) __________ because __________
ad.
ae. 12. A book publisher produces too many copies of a new book; the books don’t sell this year, so the
publisher
af.
adds the surplus books to inventories. (yes, no) __________ because __________
ag.
ah.
ai.
aj. C. The economy shown below produces three goods: computers, DVDs, and pizza. The table shows
the prices and output of the three goods for the years 2005, 2006, and 2007. Use 2005 as the base
year.
ak.
al.
am.
an. Computers
ao. DVDs
ap. Pizza
aq. Year ar. Price ax. 2005
be. 2006
bl. 2007 ay. $900
bf. 1,000
bm.
1,050 as. Quant
ity
az. 10
bg. 10.5
bn. 12 at. Price
ba. $10
bh. 12
bo. 14 au. Quant
ity
bb. 100
bi. 105
bp. 110 av. Price
bc. $15
bj. 16
bq. 17 aw. Quant
ity
bd. 2
bk. 2
br. 3 bs.
bt. Calculate nominal GDP in the economy for each of the three years. What is the percent change in
nominal GDP from 2005 to 2006 and from 2006 to 2007? Hint: Nominal GDP for a year is the value of
all goods produced during the current year at the current year’s prices.
bu.
bv. For questions 13 - 15 round your answer to the nearest whole number and use NO COMMAS.
For example 11,000.64 would be entered as 11001
bw.
bx. 13. Nominal GDP in 2005 is $ __________.
by.
bz. 14. Nominal GDP in 2006 is $ __________.
ca.
cb. 15. Nominal GDP in 2007 is $ __________.
cc.
cd.
ce. For questions 16 and 17 round your answer to one decimal point. For example 23.354 would be
entered as 23.4. You will get an incorrect answer here if your answers for 13 – 15 are not
correct, so you may want to check to make sure 13 – 15 are correct before continuing.
cf.
cg. 16. The percent change in nominal GDP from 2005 to 2006 is __________ percent.
ch.
ci. 17. The percent change in nominal GDP from 2006 to 2007 is __________ percent. cj.
ck.
cl. Calculate real GDP in the economy using 2005 (base year) prices for each of the three years. What
is the percent change in real GDP from 2005 to 2006 and from 2006 to 2007? Compare these to the
nominal values computed in 1 – 3.
cm.
cn. For questions 18 – 20 round your answer to the nearest whole number and use NO COMMAS.
For example 11,000.64 would be entered as 11001
co.
cp. 18. Real GDP in 2005 is $ __________.
cq.
cr. 19. Real GDP in 2006 is $ __________.
cs.
ct. 20. Real GDP in 2007 is $ __________.
cu.
cv.
cw.For questions 21 and 22 round your answer to one decimal point. For example 23.354 would be
entered as 23.4
cx.
cy. 21. The percent change in real GDP from 2005 to 2006 is __________ percent.
cz.
da. 22. The percent change in real GDP from 2006 to 2007 is __________ percent.
db.
dc.
dd. If the table represented a market basket for a CPI in an economy which actually has hundreds of
goods what would the price index be for each of the three years? Calculate a price index for each
year using 2005 as the base year.
de.
df. For questions 23 - 25 round your answer to one decimal point. (23.354 would be entered as
23.4)
dg.
dh. 23. The price index in 2005 is __________.
di.
dj. 24. The price index in 2006 is __________.
dk.
dl. 25. The price index in 2007 is __________.
dm.
dn. Calculate real GDP for each of the three years using the answers you obtained in 13 - 15 and the price
indices obtained in 23 – 25. To get correct answers here you must have correct answers for
questions 13 – 15 and 23 - 25.
do.
dp.
dq. For questions 26 – 28 round your answer to the nearest whole number and use NO COMMAS.
For example 11,000.64 would be entered as 11001.
dr.
ds. 26. Real GDP in 2005 is $ __________.
dt.
du. 27. Real GDP in 2006 is $ __________.
dv.
dw. 28. Real GDP in 2007 is $ __________.
dx.
dy. Note: You should get similar answers for 18 - 20 and 26 - 28. They will differ by as much as $20 or so
due to rounding, but you should now appreciate how much easier it is to use a price index to convert
nominal values to real values than to try and compute them the way you did in 18 - 20. This assumes
that someone else computes the actual indexes and provides you with them. In an economy with many
thousands of goods and services (rather than 3) actually computing real values would be very difficult without price indexes. I think you can now appreciate why a representative market basket is used to
compute price indexes. It still includes a large number of goods and services but certainly a smaller
number than those actually in the economy.
dz.
ea.
eb. D. The table below shows data on nominal GDP (in billions of dollars), real GDP (in billions of 2000
dollars), and population (in thousands) of the United States in 1960, 1970, 1980, 1990, 2000, and 2008,
years in which the U.S. price level consistently rose.
ec.
ed. Year
ee. Nominal
eg. Real
ei. Populatio
ek. Per
el. Per
GDP
GDP
n
Capi
Capi
ef. (billions
eh. (billions
ej. (billions)
ta
ta
of
of
Nom
Real
dollars)
dollars)
inal
GDP
GDP
er.
em.
en. 526.4
eo. 2501.8
ep. 0.181
eq.
13,82
1960
2,908 es. 1970 et. 1038.5 eu. 3771.9 ev. 0.205 2 ex.
ew. 18,40
0 5,066 fx.
a.
b.
c.
d.
e.
f.
fy.
fz. ey. 1980 ez. 2789.5 fa. 5161.7 fb. 0.227 fc. fe. 1990 ff. 5803.1 fg. 7112.5 fh. 0.249 fi. fk. 2000 fl. 9817.0 fm. 9817.0 fn. 0.281 fq. 2008 fr. 14280.7 fs. 11671.3 ft. 0.304 fd.
12,28
9 22,73
9
fj. 23,30
6 fo. 34,9
36
fu. 46,9
76 28,56
4 fp. 34,9
36
fv. 38,3
92 fw.
29. Which year was the base year used in this time series? How do you know?
1960
1970
1980
1990
2000
2007
Complete the table. Calculate per capita values for 2000 and 2008. Round your answers to the
nearest whole number and use NO COMMAS. For example 11,000.64 would be entered as 11001 ga.
gb.
capita nominal GDP in 2000 was $ 34936
gc.
gd.
capita real GDP in 2000 was $ 34936
ge.
gf.
capita nominal GDP in 2008 was $ 46976
gg.
gh.
capita real GDP in 2008 was $ 38392
gi.
gj. 30. Per
31. Per
32. Per
33. Per gk. GDP can be adjusted for both price increases and population increases. To see the difference that
these adjustments can have on the data calculate the percent changes requested below.
gl.
gm.
Round your answers to one decimal point. For example 23.354 would be entered as 23.4
gn.
go. 34. The percent change in nominal GDP from 2000 to 2008 was __________ percent.
gp.
gq. 35. The percent change in per capita nominal GDP from 2000 to 2008 was __________ percent.
gr.
gs. 36. The percent change in real GDP from 2000 to 2008 was __________ percent.
gt.
gu. 37. The percent change in per capita real GDP from 2000 to 2008 was __________ percent.
gv.
gw.
gx. E. Suppose you are planning on comparing GDP data over time or between countries to determine the
level of prosperity each year or in each country. Were real or nominal values better indicators of actual
changes in prosperity? Does adjusting for population changes (using per capita measures) make the
measure a better or worse indicator?
gy.
gz. 38. Which of the four measures shown below would give the best measure of prosperity or quality of
life in a country at a given point in time?
ha.
a. nominal GDP
hb.
b. real GDP
hc.
c. per capita nominal GDP
hd.
d. per capita real GDP
he.
hf.
hg. 39. Which of the four measures shown below would give the worst measure of prosperity or quality of
life in a country at a given point in time?
hh.
a. nominal GDP
hi.
b. real GDP
hj.
c. per capita nominal GDP
hk.
d. per capita real GDP
hl.
hm.
hn. 40. The inflation rate in any given year is equal to:
ho.
hp. a.
hq.
hr. b.
hs.
ht. c. nominal GDP? year 2?nominal GDP? year1
nominal GDP? year 1
real GDP? year 2?real GDP? year 1
real GDP? year 1 x 100 x 100 price index? year 2? price index? year 1
price index? year 1 x 100 hu.
hv. d. all of the above would result in the same inflation rate
hw.
hx.
A. 1. To calculate GDP using the expenditures (aggregate spending) approach which of the following would be
included (pick all that apply – there will be more than one)?
a.
b.
c.
d.
e.
f. Consumer spending
Exports
Government purchases
Imports
Interest
Investment spending g.
h.
i.
j.
k. Private savings
Profit
Rent
Taxes
Wages 2. Using the expenditure approach, GDP in the economy shown above is equal to:
______ + _____ + _____ + _____ - _____ = GDP
Fill the blanks with the letters used in the text and notes to abbreviate each of the items you chose in Question
1. (Not the letters used for choices in Q1.)
For this economy, using the expenditures approach, GDP would equal $ __________ .
3. To calculate GDP using the income approach which of the following would be included (pick all that apply)?
a.
b.
c.
d.
e.
f.
m.
n.
o.
p.
q.
r. Consumer spending
Exports
Government purchases
Imports
Interest
Investment spending g.
h.
i.
j.
k.
l. Private savings
Profit
Rent
Taxes
Wages 4. Using the income method, GDP in the economy shown above would equal $__________ .
5. Net exports equal $ __________ .
Disposable income equals $ __________ . s.
t.
u. 6. How does the government shown in the circular flow diagram above finance its purchases of goods
and services (select all that apply)?
v.
a. Consumer spending
g. Private savings
b. Exports
h. Profit
c. Government purchases
i. Rent
d. Imports
j. Taxes
e. Interest
k. Wages
f. Investment spending
l.
m.
n.
o. B. Would each of the following transactions be included in GDP for the United States? Why or why
not?
p. Put yes or no in the first blank and the letter for the reason (from the choices given below) in the
second blank for questions 7 - 12.
q.
a. It is consumption
c. It is a purely financial
e. It is an export and is
spending.
transaction.
added to GDP.
b. It is investment
d. It was not produced this
f. It is an import and is
spending.
year.
subtracted from GDP.
r. s.
t. 7. Coca-Cola builds a new bottling plant in the United States. (yes, no) __________ because
__________ u.
v. 8. Delta sells one of its existing airplanes to Korean Air. (yes, no) __________ because __________
w.
x. 9. Ms. Moneybags buys an existing share of Disney stock. (yes, no) __________ because
__________
y.
z. 10. A California winery produces a bottle of Chardonnay and sells it to a customer in Montreal,
Canada.
aa.
(yes, no) __________ because __________
ab.
ac. 11. An American buys a bottle of French perfume in Tulsa. (yes, no) __________ because __________
ad.
ae. 12. A book publisher produces too many copies of a new book; the books don’t sell this year, so the
publisher
af.
adds the surplus books to inventories. (yes, no) __________ because __________
ag.
ah.
ai.
aj. C. The economy shown below produces three goods: computers, DVDs, and pizza. The table shows
the prices and output of the three goods for the years 2005, 2006, and 2007. Use 2005 as the base
year.
ak.
al.
am.
an. Computers
ao. DVDs
ap. Pizza
aq. Year ar. Price ax. 2005
be. 2006
bl. 2007 ay. $900
bf. 1,000
bm.
1,050 as. Quant
ity
az. 10
bg. 10.5
bn. 12 at. Price
ba. $10
bh. 12
bo. 14 au. Quant
ity
bb. 100
bi. 105
bp. 110 av. Price
bc. $15
bj. 16
bq. 17 aw. Quant
ity
bd. 2
bk. 2
br. 3 bs.
bt. Calculate nominal GDP in the economy for each of the three years. What is the percent change in
nominal GDP from 2005 to 2006 and from 2006 to 2007? Hint: Nominal GDP for a year is the value of
all goods produced during the current year at the current year’s prices.
bu.
bv. For questions 13 - 15 round your answer to the nearest whole number and use NO COMMAS.
For example 11,000.64 would be entered as 11001
bw.
bx. 13. Nominal GDP in 2005 is $ __________.
by.
bz. 14. Nominal GDP in 2006 is $ __________.
ca.
cb. 15. Nominal GDP in 2007 is $ __________.
cc.
cd.
ce. For questions 16 and 17 round your answer to one decimal point. For example 23.354 would be
entered as 23.4. You will get an incorrect answer here if your answers for 13 – 15 are not
correct, so you may want to check to make sure 13 – 15 are correct before continuing.
cf.
cg. 16. The percent change in nominal GDP from 2005 to 2006 is __________ percent.
ch.
ci. 17. The percent change in nominal GDP from 2006 to 2007 is __________ percent. cj.
ck.
cl. Calculate real GDP in the economy using 2005 (base year) prices for each of the three years. What
is the percent change in real GDP from 2005 to 2006 and from 2006 to 2007? Compare these to the
nominal values computed in 1 – 3.
cm.
cn. For questions 18 – 20 round your answer to the nearest whole number and use NO COMMAS.
For example 11,000.64 would be entered as 11001
co.
cp. 18. Real GDP in 2005 is $ __________.
cq.
cr. 19. Real GDP in 2006 is $ __________.
cs.
ct. 20. Real GDP in 2007 is $ __________.
cu.
cv.
cw.For questions 21 and 22 round your answer to one decimal point. For example 23.354 would be
entered as 23.4
cx.
cy. 21. The percent change in real GDP from 2005 to 2006 is __________ percent.
cz.
da. 22. The percent change in real GDP from 2006 to 2007 is __________ percent.
db.
dc.
dd. If the table represented a market basket for a CPI in an economy which actually has hundreds of
goods what would the price index be for each of the three years? Calculate a price index for each
year using 2005 as the base year.
de.
df. For questions 23 - 25 round your answer to one decimal point. (23.354 would be entered as
23.4)
dg.
dh. 23. The price index in 2005 is __________.
di.
dj. 24. The price index in 2006 is __________.
dk.
dl. 25. The price index in 2007 is __________.
dm.
dn. Calculate real GDP for each of the three years using the answers you obtained in 13 - 15 and the price
indices obtained in 23 – 25. To get correct answers here you must have correct answers for
questions 13 – 15 and 23 - 25.
do.
dp.
dq. For questions 26 – 28 round your answer to the nearest whole number and use NO COMMAS.
For example 11,000.64 would be entered as 11001.
dr.
ds. 26. Real GDP in 2005 is $ __________.
dt.
du. 27. Real GDP in 2006 is $ __________.
dv.
dw. 28. Real GDP in 2007 is $ __________.
dx.
dy. Note: You should get similar answers for 18 - 20 and 26 - 28. They will differ by as much as $20 or so
due to rounding, but you should now appreciate how much easier it is to use a price index to convert
nominal values to real values than to try and compute them the way you did in 18 - 20. This assumes
that someone else computes the actual indexes and provides you with them. In an economy with many
thousands of goods and services (rather than 3) actually computing real values would be very difficult without price indexes. I think you can now appreciate why a representative market basket is used to
compute price indexes. It still includes a large number of goods and services but certainly a smaller
number than those actually in the economy.
dz.
ea.
eb. D. The table below shows data on nominal GDP (in billions of dollars), real GDP (in billions of 2000
dollars), and population (in thousands) of the United States in 1960, 1970, 1980, 1990, 2000, and 2008,
years in which the U.S. price level consistently rose.
ec.
ed. Year
ee. Nominal
eg. Real
ei. Populatio
ek. Per
el. Per
GDP
GDP
n
Capi
Capi
ef. (billions
eh. (billions
ej. (billions)
ta
ta
of
of
Nom
Real
dollars)
dollars)
inal
GDP
GDP
er.
em.
en. 526.4
eo. 2501.8
ep. 0.181
eq.
13,82
1960
2,908 es. 1970 et. 1038.5 eu. 3771.9 ev. 0.205 2 ex.
ew. 18,40
0 5,066 fx.
a.
b.
c.
d.
e.
f.
fy.
fz. ey. 1980 ez. 2789.5 fa. 5161.7 fb. 0.227 fc. fe. 1990 ff. 5803.1 fg. 7112.5 fh. 0.249 fi. fk. 2000 fl. 9817.0 fm. 9817.0 fn. 0.281 fq. 2008 fr. 14280.7 fs. 11671.3 ft. 0.304 fd.
12,28
9 22,73
9
fj. 23,30
6 fo. 34,9
36
fu. 46,9
76 28,56
4 fp. 34,9
36
fv. 38,3
92 fw.
29. Which year was the base year used in this time series? How do you know?
1960
1970
1980
1990
2000
2007
Complete the table. Calculate per capita values for 2000 and 2008. Round your answers to the
nearest whole number and use NO COMMAS. For example 11,000.64 would be entered as 11001 ga.
gb.
capita nominal GDP in 2000 was $ 34936
gc.
gd.
capita real GDP in 2000 was $ 34936
ge.
gf.
capita nominal GDP in 2008 was $ 46976
gg.
gh.
capita real GDP in 2008 was $ 38392
gi.
gj. 30. Per
31. Per
32. Per
33. Per gk. GDP can be adjusted for both price increases and population increases. To see the difference that
these adjustments can have on the data calculate the percent changes requested below.
gl.
gm.
Round your answers to one decimal point. For example 23.354 would be entered as 23.4
gn.
go. 34. The percent change in nominal GDP from 2000 to 2008 was __________ percent.
gp.
gq. 35. The percent change in per capita nominal GDP from 2000 to 2008 was __________ percent.
gr.
gs. 36. The percent change in real GDP from 2000 to 2008 was __________ percent.
gt.
gu. 37. The percent change in per capita real GDP from 2000 to 2008 was __________ percent.
gv.
gw.
gx. E. Suppose you are planning on comparing GDP data over time or between countries to determine the
level of prosperity each year or in each country. Were real or nominal values better indicators of actual
changes in prosperity? Does adjusting for population changes (using per capita measures) make the
measure a better or worse indicator?
gy.
gz. 38. Which of the four measures shown below would give the best measure of prosperity or quality of
life in a country at a given point in time?
ha.
a. nominal GDP
hb.
b. real GDP
hc.
c. per capita nominal GDP
hd.
d. per capita real GDP
he.
hf.
hg. 39. Which of the four measures shown below would give the worst measure of prosperity or quality of
life in a country at a given point in time?
hh.
a. nominal GDP
hi.
b. real GDP
hj.
c. per capita nominal GDP
hk.
d. per capita real GDP
hl.
hm.
hn. 40. The inflation rate in any given year is equal to:
ho.
hp. a.
hq.
hr. b.
hs.
ht. c. nominal GDP? year 2?nominal GDP? year1
nominal GDP? year 1
real GDP? year 2?real GDP? year 1
real GDP? year 1 x 100 x 100 price index? year 2? price index? year 1
price index? year 1 x 100 hu.
hv. d. all of the above would result in the same inflation rate
hw.
hx.
-
Rating:
/5
Solution: CNM ECON2200 - To calculate GDP using the expenditures