Unit 7 Assignment
answer the following questions. Submit
as a Microsoft Word® document to the Dropbox when completed.
1. Why does
inflation make nominal GDP a poor measure of the increase in total
component of GDP will be affected by each of the following transactions
involving FlyCheap Airlines? If you do
not believe any component will be affected, briefly explain why.
purchase a ticket on a FlyCheap Airlines to visit your niece.
FlyCheap Airlines purchases a new jetliner from Boeing.
FlyCheap Airlines purchases new seats to be installed on a jetliner it already
Airlines purchases 200 million gallons of fuel.
French citizen purchases a ticket to fly on a FlyCheap flight from Paris to New
city of Nashville agrees to spend funds to extend one of the runways so that
FlyCheap will be able to land larger jets.
3. Use the table to answer the following
Real GDP (Billions
of 2000 Dollars)
Calculate the growth rate of real GDP for each year from 1994 to 1997.
Calculate the average annual growth rate of real GDP for the period from 1994
iii. How does the average annual growth rate
you calculated in (ii) above compare to the average growth rate the U.S.
4. In an open
economy, trade is allowed between countries.
Assume a consumer purchases $1,000 worth of furniture manufactured in
China. Answer the following:
Which component(s) of GDP are impacted by
Does GDP increase, decrease or stay the
same? Briefly explain why.
Does your answer change if the company in
China is a U.S.-owned company? Why or
Submitting your Assignment
Complete your assignment in this Microsoft
Word® document and save it as Username-MT445Assignment-Unit#.doc (Example:TAllen-MT445Assignment-Unit4.doc).
Submit your file by selecting the Unit 4: Assignment Dropbox by the end of Unit