EC140 Lecture Notes - Lecture 5: Macroeconomics, Autonomous Consumption, Black Market

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EC140 Lecture 4: Lecture 4 - January 16, 2019

EC140 Lecture Notes - Lecture 5: Macroeconomics, Autonomous Consumption, Black Market

EC140 Lecture Notes - Lecture 6: Consumption Function, Interest Rate, Aggregate Demand

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Exports are added to gdp to generate a measure of incomes of canadians selling goods outside the country. Imports are subtracted because they are already counted in c, i, and g. Equation that we will use over and over again. Notice: labour income is largest piece, depreciation is capital wearing out, indirect taxes less subsidies. Gdp measures production and income within a national border but some of the capital (and a small amount of the labour) within a border is owned by non-residents. Gnp=gdp-foreign resident incomes generated within canada + canadian resident incomes generated abroad. The gap is about 3-4% of gdp so gnp in canada is 3-4% less than gdp because. Canada is a large net debtor to the rest of the world. We have borrowed lots of money in the past and are still paying off international loans.

Related Questions

Gross domestic product, GDP, is calculated using the following equation, where C is consumption, I is investment, G is government spending, EX is exports, and IM is imports (EX - IM is referred to as net exports): GDP = C + I + G + EX - IM
Why is the value of imports subtracted from the sum of C, I, G, and EX in calculating GDP?
A. GDP is a measure of a nation's standard of living. Because imports can lead to an increase in U.S. unemployment, they do not improve a nation's standard of living.
B. GDP measures the value of output produced within a country. Some of the expenditures in C, I, and G derive from goods produced outside the United States.
C. GDP is a measure of the federal government's budget situation. When imports exceed exports, the government is running a budget deficit.

And suppose you put $5,000 in a bank account for one year. The money earns 6% interest and the inflation rate is 4%. Which of the following statements is true?
I. You earn $200 in interest.
II. Your purchasing power increases by $100.
III. You have $5,300 in the bank at the end of the year.
A. I only
B. II only
C. I and III only
D. II and III only
E. I, II, and III

taupecat461

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.

EC140 Lecture Notes - Lecture 5: Macroeconomics, Autonomous Consumption, Black Market

EC140 Lecture 4: Lecture 4 - January 16, 2019

EC140 Lecture Notes - Lecture 5: Macroeconomics, Autonomous Consumption, Black Market

EC140 Lecture Notes - Lecture 6: Consumption Function, Interest Rate, Aggregate Demand

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