ECON282 Lecture Notes - Lecture 2: Gdp Deflator, Gross Domestic Product, Fixed Investment

96 views4 pages

carminelouse191

12 Oct 2016

School

University of Alberta

Department

Economics

Course

ECON282

Professor

Abdul Aleem

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Total income from the production of goods and services. Total expenditure on the purchase of goods and services. *gdp is the market value of all final goods and services produced in a country during a period of time, typically a year. Intermediate goods are not included in gdp, to avoid double counting) Produced in the country: meaning, everything that is currently produced and not used goods or financial transactions. Produced in the country vs produced by nationals of the country. Nominal gdp is the value of final goods and services at current market prices. Changes in nominal gdp can be due to 2 factors: This means that comparison over time becomes irrelevant. Gnp is the value of final goods and services produced by residents of a country, even if the production takes places outside the country. Gnp = gdp + income of citizens" fop abroad - income of foreign fop in home country.

Related Questions

Calculate the missing data.

Calculate missing data from the table.

Income/Expenditure Flows	Amount (in billions)
Consumption expenditure	$7
Government expenditure	$5
Depreciation	$3
Net taxes	$2
Investment	$4
Net exports	$1
Expenditures
Income
GDP

Calculate the following.

Using the data from a partial set of national income and expenditure data, address the following:

Calculate gross domestic product (GDP) using the expenditure approach.

Determine net domestic product, gross national product (GNP), and statistical discrepancy.

Item	Amount in 2010 (in billions)
Government expenditure (G) =	$8
Consumption expenditure (C) =	$20
Investment (I) =	$5
Net exports (NX) =	$1.5
GDP (expenditure approach)=
Total wages =	$21
Net operating surplus =	$11
Net domestic product =
Indirect taxes minus subsidies =	$3.5
Capital consumption =	$2
GDP (income approach)=
Statistical discrepancy =
Net factor income from abroad =	$5.5
GNP =

Consider the tables.

Given production and price data below, address the following:

Calculate an economy's nominal GDP and real GDP.

In 2000:

Item	Quantity (millions)	Price ($/unit)	Expenditure (millions of $)
Socks	15	5	75
SIM cards	20	2	40
Defense Budget	9	5	45

Real/Nominal GDP = 160

In 2003:

Item	Quantity (millions)	Price ($/unit)	Expenditure (millions of $)
Socks	15	5	75
SIM cards	20	5	100
Defense Budget	20	10	200

Nominal GDP =

2003 Quantities valued at 2000 prices:

Item	Quantity (millions)	Price ($/unit)	Expenditure (millions of $)
Socks
SIM cards
Defense Budget

Real GDP =

Answer the following questions.

How do you measure GDP?

How do you measure real and nominal GDP?

How do you determine Consumer Price Index and what are its limitations?

Which of the following expenditures will be included in GDP which will be excluded from the calculation? Explain your answers.

Spare tires bought by Across America, a car rental company

Textbooks bought by college students

Cabinets purchased by a furniture store

A new car purchased by an NFL player

A cruise ship bought by Carnival

Question 1 Gross domestic product (GDP) measures the economy's production of

A) final goods and services.

B) intermediate goods.

C) consumer goods and services.

D) capital goods.

Question 2 Because GDP is measured in dollars per year, GDP is called a

A) stock.

B) flow.

C) cycle.

D) chain.

Question 3 Which of the following would not be included in the gross private domestic investment (I) category of GDP?

A) A retailer's additions to its inventories.

B) A bakery's purchase of a new oven.

C) A trader's purchase on NASDAQ stocks.

D) Newly built residential construction.

Question 4 Which of the following government payments would be included in the government consumption expenditures and gross investment (G) category of GDP?

A) A firefighter's monthly paycheck.

B) A retired grandmother's Social Security check.

C) A retired colonel's veteran's benefits.

D) A laid-off auto worker's unemployment conpensation check.

Question 5 The largest component in the income approach to measuring GDP is

A) compensation of employees.

B) rents.

C) profits.

D) net interest.

Question 6 Which approach to calculating GDP attempts to measure employee compensation, rents, profits, and net interest?

A) The circular-flow approach.

B) The product-market approach.

C) The income approach.

D) The expenditure approach.

Question 7 In recent years, people have benefited from greater amounts of leisure time. This trend

A) has caused GDP to rise.

B) has caused GDP to fall.

C) made GDP fluctuate randomly.

D) is not accounted for in the GDP statistic.

Question 8 National income (NI) is calculated by adjusting GDP for

A) depreciation of capital.

B) investment and net exports.

C) Social Security insurance contributions and transfer payments.

D) corporate and personal income taxes.

Question 9 If an economy's real GDP has increased, we can conclude that the economy

A) is inflationary.

B) has increased its production.

C) suffers from recession.

D) needs a tax cut.

Question 10 In the circular flow model, investment, government spending, and exports are classified as

A) injections.

B) leakages.

C) transfers.

D) consumption expenditures.

What is the market for factors of production?

What is the market for factors of production?
1. The market for factors of production is where households and firms interact to trade factors of production for factor payments. For example this is where people provide firms with labor and firms pay them with wages.
What is the money market?
1. The money market is where households, firms, and the government may save and/or invest their money to earn interests. Money market includes banks, stock market, bonds market, and other financial institutions where economic actors can buy and sell financial assets to earn interests and/or dividends.
Who are the three economic actors in the circular flow model?
1. In a circular flow model, the three main economic actors are the households, firms, and the government. Households include the typical individual consumers. Firms include businesses and similar producers in the economy. Finally, the government refers to the whole government system from federal to local level.
How is the national income of an economy determined?
1. The national income of an economy is determined by measuring the total value of the output produced in an economy or the total income earned by the actors in the economy. In a circular flow model, we can see that the value of total output produced should equal the total value of income generated and earned in the economy. This is because every dollar spent by someone in the economy is received by another person in the economy as income.
What is GDP?
1. The gross domestic product or GDP represents the sum total of the value of the final goods and services produced within the economy for a given year. It is the most commonly used measure of its economy’s productivity and income.

ECON282 Lecture Notes - Lecture 2: Gdp Deflator, Gross Domestic Product, Fixed Investment

Document Summary

Get access

Related Documents

ECON282 Lecture Notes - Lecture 2: Disposable And Discretionary Income, Transfer Payment, Final Good

ECON282 Lecture Notes - Lecture 3: Loanable Funds, Production Function, Marginal Product

ECON282 Lecture Notes - Lecture 5: Exchange Rate, Capital Outflow, Foreign Direct Investment

Related Questions