D. not included in GDP because taxes will have to be raised to pay for them. 1. The federal government pays $2 million in social security payments c. A state government pay, In 2008. consumption spending is $7,000, government spending is $2,000, transfer payments are $400, and investment spending is $1,500. $667 million, b. Explain why theoretically the income figure should be the same whichever method is used to measure GDP. C. GDP includes. For an economy, expenditure is, by definition, equal to income and a way in which we can understand GDP because A. prices of individual goods and services change, but average prices represented by inflation may rise, fall, or remain unchanged. Can we consider both the gross domestic product and receiving unilateral transfer as disposable national income of an economy? Transfer payments are not included in GDP accounting, because they. The major accounting components of GDP = Consumption + Investment + Government Spending + Exports - Imports (often written GDP = C + I + G + X - M). Why aren't transfer payments included in calculations of GDP? Why is inflation rising in a country where real GDP is higher than nominal ones? C. National income but not personal income. True or false? (a) Government purchases of labor, goods, and services (b) Savings (c) Government transfer payments. 100 words Q: Which of the following is a positive macroeconomic statement: a)The price of steel declined by 3% last year. The value of intermediate goods is included in the gross domestic product (GDP). 1. Explain why or why not. A. f-11 IAT:II Lataballaval This problem has been solved! B) Explain the two main methods used to measure GDP. The "government purchases" component of GDP does not include spending on transfer payments such as Social Security. Do you think these costs should be included in GDP? a) It is added when measuring GDP, as an element of investme. Why are nominal GDP and real GDP measures important? D. nominal GDP. GDP tends to underestimate the productive activity in the economy because it excludes the value of output from: a) public transfer payments to households. Now, it is true that this measure of production is used as a proxy of wellbeing, but there is a later lesson on why that isn't a good idea and the limitations of GDP. Transfer payments are not included in GDP because they do not reflect actual production within the economy. c. adds up all household exp. b) Why does GDP measure only the final value of goods and services? What meas, GDP calculations do not directly include the economic costs of environmental damage - for example, global warming, and acid rain. Are services purchased by the government included in the calculation of GDP using the expenditure method? Explain why intermediate goods and services usually are not included directly in GDP. Consumption b. do not represent any output. The sales of used goods are not included because they were produced in a previous year and are part of that year's GDP. How is GDP of a nation related to the revenues earned, by the government ruling that particular nation? 2. C. not included in GDP because they are not payments for currently produced goods or services. b. total spending in a nation per person. Economists use Gross Domestic Product (GDP) to measure the economic activity and the national income. If the federal government spends 12% of GDP and collects revenues of 10% of GDP, what is the deficit as a percentage of GDP? Solution Verified Answered 2 years ago Create an account to view solutions Recommended textbook solutions Principles of Macroeconomics 6th Edition ISBN: 9780538453066 (12 more) N. Gregory Mankiw 680 solutions Economics: Concepts and Choices If deflation is occurring and the nominal Gross Domestic Product (GDP) is increasing over time, then real Gross Domestic Product (GDP) is A) increasing more slowly than nominal Gross Domestic Product (GDP). Imports include goods and services purchased from the rest of the world. If the money supply increases and nominal GDP remains the same, then _____. C) Why is GDP important? Enter the amount for consumption. Understand transfer payments through miscellaneous examples. Indeed, the central bank held off on a June hike but indicated two more increases are coming in 2023. What is the relation between NNP and NI in theory? The income approach measures GDP by summing: a. C. income earned by the factors of production plus depreciation and indirect business taxes. Social security c. Interest on governm, Assume GDP is $7,000; Consumption Expenditure is $5,500; Total Tax Collection is $2,200; Government Transfer and Interest Payment is $1,200. Explain how it is defined and calculated. C. net domestic product. Social security c. Interest on governm. All final goods and services that make up GDP can be expressed in the form: a) GDP = C + I + G + (X - M) b) GDP = C + G + (X x M) c) GDP = C + I + G + (X + M) d) GDP = G + I + (X - M). What is the rate of growth of real GDP? Why does GDP omit the sales of used goods, of financial transactions and of government transfer payments? The flatter the AS curve. Gross domestic product per person. If MPC = 0.8, the sum of the indirect effect on aggregate demand through induced additional consumption purchases is equal to: a), In an economy with no foreign trade and a marginal propensity to consume of 0.8, which of the following will be true? Transfer payment is not included in GDP, therefore increased transfer payment does not affect GDP. Based on the definition of GDP, explain why transfer payments are excluded. C. usually decreases whenever nominal GDP increases. Define gross domestic product (GDP) and gross national product (GNP). You are given the following data for national economy of a country Y: \\ *Equilibrium GDP is $6000 million. C. the total value of final goods and se. B. increase GDP. Real GDP is the same as nominal GDP? 4. If the MPC in an economy is 0.8 and aggregate expenditures increase by 6 billion, then the equilibrium GDP will increase by (blank). When the economy is in an expansion, what does this mean is happening to the gross domestic product (GDP)? All rights reserved. c) Why does GDP measure only the value of goods and serv, A rightward shift of long-run aggregate supply due to technology advances without any change in aggregate demand: a. will leave real GDP unchanged. - If you are told that the annual growth-rate of Econland's real GDP in 2008 was ?3. Why are transfer payments not included as a government expenditure when calculating GDP? Value (Millions of dollars) 250 325 375 National Income Account Government Purchases (G) Taxes minus Transfer Payments (T), Given data: GDP = 10 Consumption = 7 Government Spending = 2 Private Savings = 1 Transfer Payments = 1 a) Calculate Taxes, Investment, Public Savings and National Savings b) Draw the graph of the market for loanable funds, assuming the equilibrium i, Productive activity in the underground economy: (a) results in an over statement of actual income and production in the national accounting system. Payments such as transfer payments and interest payments are excluded from the calculation of GDP because these payments do not represent purchases of goods and services, though income from transfer and interest payments may fund consumption expenditures or investment in other sectors of the economy. They are included only if they are imported. a. What is GDP and why is it important? Why are these things excluded? c. income earned within a country's boundaries. Assume the government spending multiplier is 1.5 and the economy's real GDP is $8,000 billion. b. Why do budget and revenue receipts have more percent of GDP than their expenditure GDP? Explain the following concept in detail: GDP deflator. Define the term Gross Domestic Product or GDP. Spending on capital goods c. Purchases of public goods and services d. Foreign spending on American output, Social Security payments are: a. included in GDP because they represent current income. a. prices or output; prices only b. prices only; prices or output c. prices or output; output only d. prices or output; prices or, which of the following will lead to an increase in aggregate demand? Suppose that the real GDP of a country is in equilibrium at $410 billion. What would happen to the real GDP, if the nominal GDP rises by 6 percent and the price level rises by 3 percent? d. do no, The country of Growpaw does not trade with any other country. All other trademarks and copyrights are the property of their respective owners. d. All of the above Explain your answer. In the aggregate expenditures model, if aggregate expenditures (AE) are less than GDP, then _____. In spite of this definition, some production is left out of GDP. (a) transfer payments are not income to recipients derived from the production of new goods and services; (b) transfer payments are not included in the federal budget, so they cannot be included; (c) transfer payments require recipients to provide services to the federal government; (d) only states make transfer payments. Why does GDP omit the sales of government transfer payments? Payments such as transfer payments and interest payments are excluded from the calculation of GDP because these payments do not represent purchases of goods and services, though income from transfer and interest payments may fund consumption expenditures or investment in other sectors of the economy. Which of the following is included in GDP? For example, when income tax increases, consumption decreases, as a result, aggregate demand decrease. I just don't see as many factors. Why is depreciation deducted from gross domestic product of national product? 1. B. D. Both B and C E. Both A and C. Is GDP measuring output revenue or input spending? If a high GDP creates more need for imports, then doesn't that affect the balance of trade? Why does GDP omit the sales of government transfer payments? Many economists argue that real GDP is not a good measure of economic well-being because - it overvalues the increases in nonmarket transactions. A Division of NBCUniversal. Explain how GDP is measured according to the expenditure and income approaches. What is GDP (Gross Domestic Product)? Transfer payments are not included in GDP calculations because: a. b)Reduced by shifting aggregate demand to the left. $533.3. Colas noted that the Fed "has no other viable option now" as it seeks to pull down inflation, even if that means risking a recession. "There isn't anybody alive who can tell us what the playbook should look like after a pandemic," Hogan said. (c) excludes services. For the following situation, decide if this transaction will affect GDP and, if so, in which expenditure category it will be included. When measuring the gross domestic product (GDP) for a country, we subtract out imports. Personal income and disposable income. C + I + G + NX. Why transfer payments do not increase GDP? Which of the following best explains why transfer payments are not included in the calculation of gross domestic product? Wage payments to government employees b. How can be GNP derive from GDP? c. of the definition of GDP. Who are the experts? a. consumption b. investment c. government d. net exports e. not included in GDP, In 1995, the U.S. economy imported $750 billion in goods and exported $576 billion in goods. C. If the AD curve is steep. What's it: Transfer payments are payments by the government to the private sector without having to pay for the goods and services provided. B. Explain the contribution of each component to the GDP with data. How many goods contributing to the total GDP can you list whose rList some ways in which increased inefficiency could cause GDP, What is the eventual effect on real GDP if the government increase its purchases of goods and services by $50,000? $118 million, c. $85 million, d. $15 million. \\ Find: \\ A. "Markets understand that but take comfort that the current labor market picture offsets some of that risk," he added. Using the following national income accounting data, compute the GDP by both the expenditure and income approach. A. Receipts of income from abroad were $211 billion while income payments going. Fill in the blanks: (GDP Accounting) For GDP accounting, intermediate goods are _. Explore transfer payments. b. foreign goods as well as domestically produced goods. b. consumption, gross private domestic investment, government spending for goods and services, and exports. B. usually increases whenever real GDP decreases. A. Transfer payments are included in the government budget deficit but not included in the government purchases component of GDP. Explain whether the transfer payment from the government in a year's GDP will be included if the Healthcare Company M receives an unemployment check. The term 'transfer payment' is . d)The amount by which equilibr, Suppose aggregate demand increases because of the increase of consumer confidence, causing inflation, thus money demand curve in the money market model increases. Measuring GDP and other macroeconomic variables- Suppose that government transfers are 10, interest on the government debt is 5, taxes are 30, government expenditures are 20, consumption expenditures, In a simple economy (assume there are no taxes; thus, Y is disposable income), the consumption is C = 50 + 0.80 Y. The income approach to measuring GDP: a. uses the payment paid to the four resources used to produce goods and services to estimate GDP. Suppose that inflation rate is 5%, the rate of growth of nominal GDP is 8%, then what is the rate of growth of real GDP? True or False, and explain each answer: - If prices are rising, then real GDP rises more slowly than nominal GDP. This is why they are not included in the calculation of GDP. b. value of all goods and services produced within a country in a given period of time. c. can cause Gross Domestic Product (GDP) to increase or decrease, depending. The term gross domestic product (GDP) refers to what? Exports are $400 and imports are $100. What is meant by the following term: Gross domestic product (GDP)? b. results in a lower price level. Use the aggregate expenditures model and assume an economy is in equilibrium at $5 trillion, which is $250 billion above full-employment GDP. C. the AS curve shifts leftward. c.) are funded by general taxes d.) are paid by the gov. We usually discuss GDP in terms of what is included in the definition. Explore transfer payments. Assume the marginal propensity to consume MPC is 0.75. Why would including such transactions make GDP a less informative measure of economic well-being? This is called. GDP is sometimes referred as 'size of the economy' indicating country's economic performance. Give two reasons why GDP does not reflect total production in an economy. "I'm not talking about disaster," he added. a. c. Of government transfer payments? Indeed, a "this time is different" narrative could well apply to a situation the economy has never faced before: A unique global pandemic, met with the most aggressive fiscal and monetary response in history, all of which helped create the highest inflation level in more than 40 years, requiring a strong policy pivot in which the Federal Reserve is trying to engineer a soft landing that could include a shallow recession. Which of the following scenarios are either not account. The services part of the economy remains strong, and even housing numbers of late are turning around. b. a. final; included in b. final; excluded from c. intermediate; included in d. intermediate; excluded from.
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