...Assignment 2: What is Gross Domestic Product? Jeanette Macintyre Argosy University ECO 201 Assignment 2: What is Gross Domestic Product? Based on the information contained on the website http://www.bea.gov/index.htm, answer the following questions: 1. What was Real GDP for 2009? According to Table 1.1.6. (Real Gross Domestic Product, Chained Dollars) the GDP of 2009 is 14,418 billion dollars (“Table 1.1.6”, 2015). a. What does GDP tell us? GDP is the output of goods and services by labor and property. GDP measures aggregate final production taking place in a country. GDP = Consumption + Investment + Government spending + Net exports (Colander, 2007 pg 159). b. How did GDP change from 2008? According to Table 1.1.6. (Real Gross Domestic Product, Chained Dollars) the GDP of 2008 was 14,830(“Table 1.1.6”, 2015). That is a decrease of 412 billion dollars in 2009 a difference of 2.8% (“Table 1.7.1”, 2015). c. What caused these changes? The change was due to a decrease in durable goods in 2009. According to Table 1.1.6 (Real Gross Domestic Product, Chained Dollars) in 2008, durable goods were at 1,083 billion dollars and a decrease of 60 billion dollars down to 1,023 billion dollars in 2009, a 5.85% reduction in expenditures (“Table 1.1.6”, 2015). 2. What was GNP for 2009? According to Table 1.7.5. (Relation of Gross Domestic Product, Gross National Product, Net National Product, National Income, and Personal Income) the GNP in 2009 was 14,569 billion dollars (“Table...
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...What is GDP and why is it so important? The gross domestic product (GDP) is one the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period - you can think of it as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year. For example, if the year-to-year GDP is up 3%, this is thought to mean that the economy has grown by 3% over the last year. Measuring GDP is complicated (which is why we leave it to the economists), but at its most basic, the calculation can be done in one of two ways: either by adding up what everyone earned in a year (income approach), or by adding up what everyone spent (expenditure method). Logically, both measures should arrive at roughly the same total. The income approach, which is sometimes referred to as GDP(I), is calculated by adding up total compensation to employees, gross profits for incorporated and non incorporated firms, and taxes less any subsidies. The expenditure method is the more common approach and is calculated by adding total consumption, investment, government spending and net exports. As one can imagine, economic production and growth, what GDP represents, has a large impact on nearly everyone within that economy. For example, when the economy is healthy, you will typically see low unemployment and wage increases as businesses demand labor to meet the growing economy...
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...Gradable Assignment 1 1. Full form of GDP and what is the difference between GDP per Capita Ans: GDP–Gross Domestic Product GDP per Capita – An estimate of an individual spends as a consumer compared to the total population spending on products and services. GDP is gross domestic product, the total economic output of a country, i.e., the amount of money a country makes. GDP per capita is the total output divided by the number of people in the population, so you can get a figure of the average output of each person, i.e., the average amount of money each person makes. 2. Define or explain Purchase Power Parity in two lines Ans: Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries. 3. Which of these are Formal Institutions and Informal Institutions Ans: a. Laws- b. Ethics- c. Culture- d. Regulations- e. Norms- f. Rules- 4. Name two countries under Theocratic Laws Ans: Vatican City 5. Name at least two of the three kinds of economies Ans: An economy is a system whereby goods are produced and exchanged. Without a viable economy, a state will collapse. There are three maintypes of economies: free market, command, and mixed. 6. Name two characteristics each of Low Context and High Context cultures Ans: High Context Cultures 1. Space is communal; people stand close...
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...03/13/16 Week Eight Homework What is economic growth and how do we use GDP to measure an economy? Economic growth is measured by the value of all the products manufactured and sold in a country over the course of one year along with everything people do and get paid for. There are four categories that create GDP: consumers, investments, governmental spending and other companies that buy from another country. GDP measures income, but not equality, it measures growth, but not destruction, and it ignores values like social cohesion and the environment. However, there are countries that are trying to include social cohesion and the environment because it does have an effect on economic growth. What cause or contribute to the growth of an economy? Economic growth is measured by real GDP growth where the ability of a country to increase the value if it’s production of goods and services after removing the effects of inflation. When people earn more money they buy more products which results in economic growth. Economic growth is important for a country because it leads to a better standard of living for all its citizens, even the poor. Countries with a good economy can offer better health care services, safer working conditions and spend more on insuring a cleaner environment. Also, economic growth allows countries to reinvest money into areas that will promote future growth such as education, technology, capital and infrastructure. What is the rule of 70? The rule of 70...
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...– To what extent do national income statistics (GDP) provide a good basis for comparison between countries? In the world of Economics, GDP per capita is used to compare the way that countries are coping with different economic climates; such as recession, boom etc. This essay will be assessing whether GDP is the best statistic to use for comparing different countries’ economies. GDP is the most commonly used method by world famous economists to assess how successful an economy is. GDP stands for Gross Domestic Product and is the market value of the official goods that have been transferred in and out in a country over a certain period of time. GDP is a good method for comparing the national incomes of countries because it can be very accurate. This is especially the case when the GDP for a division is divided between the population of a country. This is a statistic called GDP per capita and is a lot more accurate at showing how wealthy a country is because it divides the value of the goods transferred in a country between the whole population. This is clearly a better way of measuring how wealthy a country is because it explains how rich each person is in a country. This is a better way of comparison between countries because it shows how rich the country is in terms of value per person instead of making assumptions. This makes a huge difference because in normal GDP, China is the richest country in the world because it is worth the most as a country; however when GDP per capita...
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...for its police force, and 10,000 cars are bought by companies to transport employees to other locations to work. They also export 65,000 cars to nearby countries for sale. Discuss the following (for all three of these questions, merely record your numerical answers). 1. What is Country A’s GDP? GDP = C + I + G + (X - M) G=25,000 C=90,000 I=10,000 X=65,000 M=50,000 GDP= 90,000+10,000+25,000+(65,000-50,000) GDP= 125,000+ (15,000) GDP= $140,000 2. What is the composition of GDP by percentage? 3. What is the GDP per capita? GDP per Capita= GDP/ Population a. GDP Per Capita = 140,000/500,000 b. GDP Per Capita= .28 Part II Go to the Bureau of Economic Analysis at this Web site (http://bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm), and look up the latest new release for real GDP. Address the following questions after reading the latest release: 1. What is the real GDP today? 3.9% 2. What is the largest component of GDP? Consumption 3.What is the smallest component of GDP? Net Exports 4. What is the fastest growing component of GDP, and why? The fastest growing component of GDP is the exports of goods and services. According to the BEA, “the increase reflects growth in personal consumption expenditures, exports and fixed investment outside residential, as well as inventory investments from the private sector and local government spending”...
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...society are weak. It allows one to identify the problematic area and helps the ways to fix restore it. GDP and profit currently dominate society’s discussions of economic performance. They shape the way people think about the economy and business, affecting their behavior and the actual outcomes of economic activity. So what is economic success? Going beyond GDP and profit will explore what we mean by economic success, the role that GDP and profit play in this, and the potential for broader measures of economic success to help us balance our economic priorities, our social goals, and the constraints imposed on us by the natural environment we live in. 1 Current measure of Performance Right measurement is a powerful instrument for social progress; wrong or imprecise measurement a source of hazard and even havoc. Two main measure of economic success are currently are GDP at the national level and profit at the Organizational level. GDP is the value added measure that is broader than Profit. GDP and profit are contested concepts that are subject to ongoing refinement. They are defined and calculated using extensive rules, processes and practices, including the system of national accounts and financial reporting standards. What do we mean by Economic success? To assess the suitability of measures of economic success, we first need to clarify what we are trying to measure. What does a ‘successful’ economy look...
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...Study Questions 1 (GDP) Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Gross domestic product is a measure of the total value of all A) consumer income in an economy over a period of time. B) capital accumulation in an economy over a period of time. C) sales in an economy over a period of time. D) final goods and services produced in an economy over a period of time. 1) 2) If Nike, an American corporation, produces sneakers in Thailand this would A) add to neither U.S. GDP nor Thailand's GDP. B) add to Thailand's GDP but not to U.S. GDP. C) count as part of U.S. GDP since it is a U.S. corporation. D) count for both Thailand's GDP and U.S. GDP. 2) 3) In 2009, Ozzie purchased a 1999 Ford Escort from his neighbor for his son, purchased a 1999 "one owner" Camry from Larchmont Toyota for his wife, bought a 2009 new Ford for himself, and sold his 1993 Dodge Caravan to his teenage nephew. Which, if any, of these transactions will be included in GDP in 2009? A) only the purchase of the Ford B) the purchase of the Ford and the Caravan C) all four transactions D) all three purchases but not the sale 3) 4) Intermediate goods are excluded from GDP because A) they represent goods that have never been purchased so they cannot be counted. B) their inclusion would understate GDP C) their inclusion would involve double counting. D) the premise of the question...
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...What is Gross Domestic Product? Samantha Vanderlooven 11/18/2013 Macroeconomics | ECO201 A02 Faculty: Online Instructor , Jad Habchi 1. What was Real GDP for 2009? The GDP for 2009 was -3.1 In 2009, GDP started to improve after four quarters of decline during The Great Recession. Nominal GDP for 2009 rebounded to $14.418 trillion Q1: $14,381 trillion Q2: $14.342 trillion Q3: $14.384 trillion Q4: $14.564 trillion Or The Real GDP for 2009 was 13,973.7 a. What does GDP tell us? The gross domestic product (GDP) is one the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period - you can think of it as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year. For example, if the year-to-year GDP is up 3%, this is thought to mean that the economy has grown by 3% over the last year. b. How did GDP change from 2008? In the revised estimates, real GDP increased 0.4 percent for 2008; in the previously published Estimates, real GDP had increased 1.1 percent. From the fourth quarter of 2007 to the first quarter of 2009, real GDP decreased 2.8 percent at an average annual rate; in the previously published estimates, it had decreased 1.8 percent. c. What caused these changes? The increase in real GDP in the third quarter...
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...expansion MSC: Definitional 2. Macroeconomic statistics include GDP, the inflation rate, the unemployment rate, retail sales, and the trade deficit. ANS: T DIF: 1 REF: 23-0 NAT: Analytic LOC: The study of economics and definitions of economics TOP: Macroeconomics MSC: Definitional 3. Macroeconomic statistics tell us about a particular household, firm, or market. ANS: F DIF: 1 REF: 23-0 NAT: Analytic LOC: The study of economics and definitions of economics TOP: Macroeconomics MSC: Definitional 4. Macroeconomics is the study of the economy as a whole. ANS: T DIF: 1 REF: 23-0 NAT: Analytic LOC: The study of economics and definitions of economics TOP: Macroeconomics MSC: Definitional 5. The goal of macroeconomics is to explain the economic changes that affect many households, firms, and markets simultaneously. ANS: T DIF: 1 REF: 23-0 NAT: Analytic LOC: The study of economics and definitions of economics TOP: Macroeconomics MSC: Definitional 6. Microeconomics and macroeconomics are closely linked. ANS: T DIF: 1 REF: 23-0 NAT: Analytic LOC: The study of economics and definitions of economics TOP: Microeconomics | Macroeconomics MSC: Definitional 7. The basic tools of supply and demand are as central to macroeconomic analysis as they are to microeconomic analysis. ANS: T DIF: 1 REF: 23-0 NAT: Analytic LOC: The study of economics and definitions of economics TOP: Demand | Supply MSC: Definitional 8. GDP is the most closely watched economic statistic because it is thought...
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...economy Is STUFF IS OUTPUT IS GDP IS GROSS DOMESTIC PRODUCT *GDP (GROSS DOMESTIC PRODUCT)=TOTAL MARKET VALUE OF ALL FINAL GOODS AND SERVICES PRODUCED IN A COUNTRY DURING A GIVEN PERIOD OF TIME.. $15,176,000,000,000.00- THIS is the economy Who measured GDP *Bureau of economic analysis BEA Part of the department of commerce They hire tons of economists and the pay is good Goods and services-mcdonalds burgers starbucks etc, not STOCKS The stock market measures the value of companies, what is apple worth? What is wal mart worth? GDP measures the value of what companies produce and sell… How many cars did ford produce how many lattes did starbucks sell? GDP IS THE ECONOMY AND GDP IS NOT THE STOCK MARKET, The Stock market is NOT GDP… *Purchasing Power Parity- Compares the value of what the money buys Mexico 2 big macs= 48 pesos, in the US two big macs are $6 in the us 48 pesos converts to $4 GDP and GROWTH GDP growing means the economy is growing All countries want GDP to grow Why does GDP growth matter to you? When GDP stops growing unemployment goes up GDP- it is both goods and services Final goods and services- does not include intermediate goods… Grapes sold at grocery store: Yes Grapes used as input to Mondavi wine: No Produced in a country… Produced in a country…inside its Borders Economy is growing at a 1.8% rate Previous look, one month earlier said it was growing at 2% What’s left out of GDP? Government payments like social...
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...28-2 (Key Question) Assuming the level of investment is $16 billion and independent of the level of total output, complete the following table and determine the equilibrium levels of output and employment in this private closed economy. What are the sizes of the MPC and MPS? | | | | | |Possible levels |Real domestic | | | |of employment |output (GDP=DI) |Consumption |Saving | |(millions) |(billions) |(billions) |(billions) | | | | | | | | | | | | | | | |40 |$240 | |$244 | |$ _____ | |45 |260 | |260 | |$ _____ | |50 |280 | |276 | |$ _____ | |55 |300 | |292 | |$ _____ ...
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...such as, hours worked and so on. The counterclockwise arrow is to show the movement of money. The reason that income must equal spending in the economy, is because for every dollar spent by some buyer is a dollar of income for some seller. 4. Why does GDP accounting include only the final value of goods and services produced? What would be the problem if intermediate products were included? The reason why only final goods and services are counted, is to steer away from multiple counting. The cost of all intermediate products and services are already included in the final sales price. So by including them would mean that the product(s) where double counted, which would overstate gross domestic product. 5. Describe why GDP can be computed using either expenditures or income? GDP can be computed by either expenditures or income due to the idea that everything that is produced by the economy is purchased. This can be measured by four major categories of spending, which are personal consumption expenditures, gross private domestic investment, government purchases, and net exports. 6. What does GDP per capita measure? Why is it not a precise measure of a typical person’s standard of living in a country? GDP per capita measures the...
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...28-2 (Key Question) Assuming the level of investment is $16 billion and independent of the level of total output, complete the following table and determine the equilibrium levels of output and employment in this private closed economy. What are the sizes of the MPC and MPS? | | | | | |Possible levels |Real domestic | | | |of employment |output (GDP=DI) |Consumption |Saving | |(millions) |(billions) |(billions) |(billions) | | | | | | | | | | | | | | | |40 |$240 | |$244 | |$ _____ | |45 |260 | |260 | |$ _____ | |50 |280 | |276 | |$ _____ | |55 |300 | |292 | |$ _____ ...
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...Chapters 1 & 2 Question 1: a) Suppose that real GDP is currently $97 billion per year and natural real GDP is currently $100 billion. Measured as a percentage, what is the GDP gap? This would be: $97b-$100b = -3/100 The GDP gap would be -3%, showing a recession in the economy. b) Suppose that natural real GDP is growing by $4 billion per year. By how much must real GDP have risen after two years to close the GDP gap? Natural GDP grows $4 billion per year which means that real GDP would have to rise 11 billion total to close the gap. Question 2: Assume that gross private domestic investment is $800 billion and the government (state, local, and federal combined) is currently running a $400 billion deficit. If households and businesses are saving $1,000 billion, what is the value of net exports? Use equation (2.6) to explain your answer. This would be: 1000-800-400 which would result in -$200 billion in net exports. Question 5: If nominal GDP is $10,608 and real GDP is $10,400, what is the value of the GDP deflator? The GDP deflator is calculated by dividing the nominal GDP by the real GDP and in this case that would be: 10,608/10,400 which would equal 1.02 for the GDP deflator. Question 10: In 2009, civilian employment was 139,877,000 and unemployment was 14,265,000. What was the unemployment rate? First we need to add the civilian unemployment to the unemployment number: 1379,877,000...
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