4 | measuring gdp and economic growth** |
Problems and Applications
1. Classify each of the following items as a final good or service or an intermediate good or service and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services:
* Banking services bought by a student.
* New cars bought by Hertz, the car rental firm.
* Newsprint bought by USA Today.
* The purchase of a new limo for the president.
* New house bought by Al Gore.
2. The firm that printed this textbook bought the paper from XYZ Paper Mills. Was this ...view middle of the document...
2 percent, purchases of new houses fell 38 percent, and exports fell 29.9 percent.
Source: Reuters, July 31, 2009
Use the letters on the figure in Problem 3 to indicate the flows in which the items in the news clip occur. How can GDP have fallen by only 1.0 percent with the big cuts in expenditure reported?
7. A U.S. market research firm deconstructed an Apple iPod and studied the manufacturers, costs and profits of each of the parts and components. The final results are
* An Apple iPod sells in the United States for $299.
* A Japanese firm, Toshiba, makes the hard disk and display screen, which cost $93.
* Other components produced in South Korea cost $25.
* Other components produced in the United States cost $21.
* The iPod is assembled in China at a cost of $5.
* The costs and profits of retailers, advertisers, and transportation firms in the United States are $75.
a. What is Apple’s profit?
b. Where in the national income and product accounts of the United States, Japan, South Korea, and China are these transactions recorded?
c. What contribution does one iPod make to world GDP?
Item | Billions of dollars |
Wages paid to labor | 8,000 |
Consumption expenditure | 10,000 |
Net operating surplus | 3,200 |
Investment | 2,000 |
Government expenditure | 2,800 |
Net exports | −700 |
Depreciation | 1,800 |
Use the following data to work Problems 8 and 9.
The table lists some macroeconomic data for the United States in 2008.
8. Calculate U.S. GDP in 2008.
9. Explain the approach (expenditure or income) that you used to calculate GDP.
Use the following data to work Problems 10 and 11.
The national accounts of Parchment Paradise are kept on (you guessed it) parchment. A fire destroys the statistics office. The accounts are now incomplete but they contain the following data:
* GDP (income approach): $2,900
* Consumption expenditure: $2,000
* Indirect taxes less subsidies: $100
* Net operating surplus: $500
* Investment: $800
* Government expenditure: $400
* Wages: $2,000
* Net exports: –$200
10. Calculate GDP (expenditure approach) and depreciation.
11. Calculate net domestic product at factor cost and the statistical discrepancy.
Use the following data to work Problems 12 and 13.