ECON 101 Study Guide - Midterm Guide: Xm Satellite Radio, Barter, W. M. Keck Observatory

The components of GDP in the accompanying table were produced by the Bureau of Economic Analysis. Category Components of GDP in 2013 (billions of dollars)

Consumer spending

Durable goods $1,263.0

Nondurable goods 2,622.9

Services 7,615.7

Private investment spending

Fixed investment spending 2,564.0

Nonresidential 2,047.1

Structures 456.4

Equipment and intellectual property products 1,590.7

Residential 516.9

Change in private inventories 106.1

Net exports

Exports 2,259.9

Imports 2,757.2

Government purchases of goods and services and investment spending

Federal 1,245.9

National defense 770.7

Nondefense 475.1

State and local 1,879.6

1) Calculate 2013 consumer spending.

2) Calculate 2013 private investment spending.

3) Calculate 2013 net exports.

4) Calculate 2013 government purchases of goods and services and government investment spending.

5) Calculate 2013 gross domestic product.

6) Calculate 2013 consumer spending on services as a percentage of total consumer spending.

7) Calculate 2013 exports as a percentage of imports.

8) Calculate 2013 government purchases on national defense as a percentage of federal government purchases of goods and services.

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1.Why was the nominal GDP greater than real GDP in each of those quarters?

2.What was the percentage change in Nominal GDP for the most recent quarter compared to the previous quarter? What was the percentage change in real GDP for the two quarters?

3.What accounts for the difference in the two percentages?

There are five questions. Each question is worth one point. Consider the following list of data for a country for a given year. Amounts are in billions of dollars. Your answers should be based on the U.S. national-accounts. In your answers, you may refer to the items by the abbreviations shown.

1. Compute national income. Show your work.

2. Compute GDP via the “resource-cost income” approach. Show your work.

3. Compute GDP via the “expenditures” approach. Show your work.

4. Two items in the list are negative. How can these items be negative and yet be components of GDP? Could these items be positive and still be components of GDP? Explain carefully and thoroughly.

5. Two items in the list are not part of the answers to 1-3. Which are the items and why do they not enter the answers? Explain carefully and thoroughly.