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engl 212 class notes

engl 212 class notes

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In macroeconomics, the word "investment" typically refers to thedollar value of goods and services purchased by businesses, houses purchased by households and inventory accumulated by businesses.

dollar value of goods and services purchased by businesses, houses purchased by households and inventory accumulated by businesses

In macroeconomics, the word "consumption" typically refers to thedollar value of all goods and services (except houses) purchased by households .

dollar value of all goods and services (except houses) purchased by households

In macroeconomics, the word "GDP" refers to the dollar value of all final goods and services produced within a country’s borders .

dollar value of all final goods and services produced within a country’s borders

Suppose that the American economy enters in a new recession and the number of unemployed workers in the economy increases from 7.5 million people to 8.5 million people. Holding everything else constant, how do you expect national aggregates to change?

Aggregate consumption is expected to  decrease Private investment is expected to  decrease Imports are expected to decrease 

The following table provides data on two final goods produced in a country during 2010 and 2011.YearQuantityPrice PizzaBeerPizzaBeer20101,0002,000$12$220113,0001,000$15$4 For simplicity, assume that this country does not produce any other goods or services. Given the information in the table above, if 2011 is the base year,nominal GDP in 2010 is _____.

16000.0000

Based on the information from the previous question, real GDP in 2010 is ____.

23000.0000

 An example of "investment" in the national income accounts is the purchase of

a new set of tools by an auto mechanic, for use in repairing cars.

When calculating real GDP we use quantities produced in thecurrent year or quarter and prices in the current year or quarter.When calculating nominal GDP we use quantities produced in thecurrent year or quarter and prices in the current year or quarter.Therefore, in the base year or quarter, real GDP is equal to nominal GDP.

1) Current2) Current3) Current4) Base5) is equal to

Which of the following activities affect GDP in Japan?I. Mitsubishi Heavy Industries makes the wings of the new Boeing 787 Dreamliner in Japan.II. Toyota assembles cars for the U.S. market in Kentucky.III. Japanese consumers buy American cars produced by Ford Motor Company in Michigan.

(I) Only

Explain how each of the following transactions affects U.S. GDP and its components:1. When you buy an airline ticket from a company located in the U.S.,  GDP  increases because this transaction increases aggregate consumption (C)2. When you buy a German car, U.S. GDP  is not affected because this transaction increases consumption and increases imports by the same amount3. When Toyota produces cars in the U.S., U.S. GDP  increasesbecause this transaction  increases either consumption or investment  

Answer 1:increases Answer 2:increases aggregate consumption (C) Answer 3:is not affected Answer 4:increases consumption and increases imports by the same amountAnswer 5:increases Answer 6:increases either consumption or investment 

If a Canadian firm buys a new industrial sewing machine from a company located in China, then Canadian ______.I.   net exports decrease.II.   investment increases.

both I and II 

Read page 93 of your textbook ("Limitations of Real GDP") and the following article: to an external site.) In the text field below, write your opinion about Stiglitz's view. Do you agree with him? If so, why do you think economists and policymakers are still heavily relying on GDP as a well being indicator?

Opinionated question, but basically he talks about how GDP is an outdated means of measuring one economy's success and the book talks about all the things that GDP leaves out of its calculation.