•No. GDP for 2011 includes only production that occurs during 2011.
•Would the services of a real estate agent who helped sell (or helped buy) the
house be included in GDP for 2011?
•Yes. GDP for 2011 includes the market value of final goods and services.
This includes real estate services.
11. An article in the Wall Street Journal observed: “Plenty of companies, both in the U. S.
and abroad, came to depend on U.S. consumers for their growth. They may have to
peddle their wares elsewhere.” U.S. and foreign firms will need to depend less on U.S.
consumers in the future because
•U.S. consumers are saving more and spending less.
12. Suppose that a simple economy produces only the following four goods and services:
textbooks, hamburgers, shirts, and cotton. Further, assume that all of the cotton used in
the production of shirts. Use the information in the following table to calculate Nominal
Gross Domestic Product (NGDP) for 2011. Production and Price Statistics for 2011
•The NGDP for the year 2011 is $7,450.
13. For the total value of expenditures on final goods and services to equal the total value of
income generated from producing those final goods and services, all the money that a
business receives form the sale of its product must be paid out as income to the owners
of the factors of production. How can a business make a profit if it pays out as income all
the money it receives?
•Profit is the income that remains after a firm has paid wages, rent, and interest.
14. Review the following events: 1. A farmer sells $200 worth of wheat to an agricultural
products distributor. 2. The distributor trims, packages, and sells the wheat to a state-
owned bakery for $300. 3. The state-owned bkaery uses all of the wheat to make bread
and then sells it for $250.
•If, for simplicity, we ignore the value of inputs used to grow the wheat-such as
seeds, labor, and fertilizer, then the farmer’s value added is $200. (Enter your
response as an integer and include a minus sign if necessary.)
•The value added for the distributor is $100.