POL200Y1 Lecture Notes - Lecture 5: Personal Consumption Expenditures Price Index, Capital Formation, Nominal Interest Rate

53 views5 pages
8 Mar 2021
School
Course

For unlimited access to Study Guides, a Grade+ subscription is required.

ECONTWO: EXERCISE 1
WINFRED M. VILLAMIL 2rd TERM, 2015--2016
---------------------------------------------------------------------------------------------------------------------------
I. Indicate to which the following items of GDP belong by writing C for personal consumption
expenditure, I for gross capital formation, G for government spending, and EX for exports. Write O if it is
excluded from current GDP.
O 1. Payment by the government of social security benefits to a retired public school teacher
G 2. Construction by government of a new road.
I 3. Net additions to the stock of unsold shoes.
I 4. Newly constructed residential homes.
I 5. Purchase of new machines by a private firm.
C 6. Payments you made to David’s Salon for your hair and make up.
O 7. Purchases of stocks and bonds by an investor.
O 8. Production and sale of marijuana
I 9. Construction of a new factory by a private enterprise.
O 10. Purchases of imported chocolates by consumers.
O 11. Vegetables produced in the backyard and consumed by the household.
O 12. Sales of second hand cars.
EX13. Sales by Intel Philippines of semiconductors to the US.
O 14. Sales of a San Miguel Brewery in Hong Kong to the Chinese Mainland.
O 15. Sales by Motolite of car batteries to Nissan Philippines
II.. Indicate to which the following items belong by writing GDP for Gross Domestic Product, GNP for
Gross National Product. “Both” for an item that is included in both GDP and GNP.
BOTH 1. Salary of your teacher in Economics.
BOTH 2. Christmas bonus paid to government employees of the Philippines.
BOTH 3. Medical insurance premium paid to a Filipino insurance company in Makati.
GDP 4. Consultancy fee of a US scientist working in the Philippines.
GNP 5. Salaries of overseas Filipinos in Hong Kong.
GNP 6. Profits of San Miguel in Hong Kong.
GDP 7. Profits of US shareholder of Intel Philippines.
GNP 8. Rental income of a Filipino who owns an apartment in the US.
BOTH 9. Rental income of a Filipino owned condominium in Vito Cruz.
GDP 10. Salary of the Japanese president of Honda Philippines.
III. Fill in the blanks.
1. A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to
produce a bicycle, which it sells for $250. Taken together, these two transactions contribute how
much to GDP? Ans. $250
2. Suppose there are only two firms in an economy: Rolling Rawhide produces rawhide and sells it to
Chewy Chomp, Inc., which uses the rawhide to produce and sell dog chews. With each $2 of
rawhide that it buys from Rolling Rawhide, Chewy Chomp, Inc. produces a dog chew and sells it for
$5. Neither firm had any inventory at the beginning of 2008. During that year, Rolling Rawhide
produced enough rawhide for 1000 dog chews. Chewy Chomp, Inc. bought 75% of that rawhide for
$1500 and promised to buy the remaining 25% for $500 in 2009. Chewy Chomp, Inc. produced 750
Unlock document

This preview shows pages 1-2 of the document.
Unlock all 5 pages and 3 million more documents.

Already have an account? Log in
dog chews during 2008 and sold each one during that year for $5. What was the economy's GDP for
2008? Ans. $4250
IV. The table below contains data for the country of Crete for the year 2010.
Total income
$5731
Household purchases of durable goods
$1108
Household purchases of nondurable goods
$702
Household purchases of non-education services
$203
Household purchases of education services
$302
Household purchases of new housing
$816
Purchases of capital equipment
$333
Inventory changes
$75
Purchases of new structures
$267
Depreciation
$401
Local government spending on goods and services
$236
State government spending on goods and services
$419
Federal government spending on goods and services
$1182
Transfer payments
$707
Foreign purchases of domestically produced goods
$217
Domestic purchases of foreign goods
$129
1. What was Crete’s GDP in 2010? Ans. $5731
2. What was Crete’s consumption in 2010? Ans. $2315
3. What was Crete’s investment in 2010? Ans. $1491
4. What were Crete’s government purchases in 2010? Ans. $1837
5. What were Crete’s net exports in 2010? Ans. $88
V. The table below contains data for the country of Batterland, which produces only waffles and
pancakes. The base year is 2009.
Year
Price of
Waffles
Quantity of
Waffles
Price of
Pancakes
Quantity of
Pancakes
2008
$2.00
100
$1.00
100
2009
$2.00
120
$2.00
150
2010
$2.00
150
$3.00
200
2011
$4.00
180
$3.00
220
1. In 2008, this country's nominal GDP was $300
2. In 2009, this country's nominal GDP was $540
3. In 2008, this country's real GDP was $400
4. In 2009, this country's real GDP was $540
5. In 2010, this country's real GDP was $700
Unlock document

This preview shows pages 1-2 of the document.
Unlock all 5 pages and 3 million more documents.

Already have an account? Log in

Get access

Grade+
$10 USD/m
Billed $120 USD annually
Homework Help
Class Notes
Textbook Notes
40 Verified Answers
Study Guides
1 Booster Class