Problem Set 1_answers

Problem Set 1_answers - Problem Set 1 - Answers 1. Explain...

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Problem Set 1 - Answers 1. Explain whether and why the following items are included in the calculation of GDP: A. Increases in business inventories B. Sales of existing homes C. The fees earned by real estate agents on selling existing homes D. Income earned by Americans living and working abroad E. Purchases of IBM stock by your brother F. Purchase of a new tank by the Department of Defense G. Rent that you pay to your landlord A. Yes; an increase in business inventories is included in investment because it increases the economy’s capital stock. B. No; the sale of an existing home is simply a transfer of assets within the household sector: one household sells and another household buys, but no goods or services are produced by the exchange. C. Yes; real estate agent fees are included in real GDP because they are payment for providing a final service to households—the service of matching homeowners who wish to sell with those who wish to buy. D. No; income earned by Americans living and working abroad is included in
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This note was uploaded on 06/23/2008 for the course ECON 206 taught by Professor Aravantanos during the Spring '08 term at CUNY Queens.

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Problem Set 1_answers - Problem Set 1 - Answers 1. Explain...

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