# CH4-8 - CHAPTER 4 PROBLEM SET HALL AND LIEBERMAN 4 TH...

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Unformatted text preview: CHAPTER 4, PROBLEM SET HALL AND LIEBERMAN, 4 TH EDITION 1. a. The percentage increase in real GDP (in \$ billions) from 1973 to 2000 was ((\$9,817 - \$4,342)/\$4,342)) = 126.1%. b. The percentage increase in the U.S. population (in millions) during this period was ((281 – 212)/212) = 32.5% c. Real GDP per person in 1973 was \$4,342 billion/212 million = \$20,481. Real GDP per person in 2000 was \$34,936. Output per person grew by 70.6% over this period. 2. a. Real GDP in 2000 would have been \$4,342 billion x (1 + 0.08) 27 = \$34.7 trillion. b. If the growth rate had been 8 percent per year, output per person in 2000 would have been \$34,684 billion/281 million = \$123,430. That would have been \$123,430 – \$34,936 = \$88,495 higher than the actual output per person that year 3. a. \$7100.5 x 1.047 = \$7,434.2 in 1992 \$7.434.2 x 1.047 = \$7,783.6 in 1993 \$7,783.6 x 1.047 = \$8,149.5 in 1994 \$8.149.5 x 1.047 = \$8,432.5 in 1995 \$8,532.5 x 1.047 = \$8,933.5 in 1996 \$8,933.5 x 1.047 = \$9,353.4 in 1997 \$9,353.4 x 1.047 = \$9,793.0 in 1998 \$9,793.0 x 1.047 = \$10,253.3 in 1999 \$10.253.3 x 1.047 = \$10,735.2 in 2000 We would have produced real GDP equal to \$10,735.2 billion in 2000 instead of \$9,817.0 billion, an increase of \$918.2 billion. b. Output per person would have been \$9,812,000,000/281,000,000 = \$34,918. This compares to the actual value of \$34,936. 4 . a. Year Real GDP (in billions) 2000 \$5,000 2001 \$5,300 2002 \$5,618 2003 \$5,955 2004 \$6,312 2005 \$6,691 2006 \$7,093 No, the real GDP line becomes steeper over time because, as real GDP rises from an increasingly higher and higher level, the same percentage growth rate causes greater and greater absolute increases in GDP. b. Year Real GDP (in billions) 2000 \$5,000 2001 \$5300 2002 \$5300 x 1.05 = \$5,565 2003 \$5565 x 1.04 = \$5,788 2004 \$5,961 2005 \$6,080 2006 \$6,141 No, the real GDP line becomes flatter due to the relatively large decrease in the growth rate. CHAPTER 5 PROBLEM SET 1. a. Counted in GDP as an increase in inventories; ―I‖ b. Counted in GDP; ―C‖ c. Not counted. This is an intermediate good whose value will be included in the value of the restaurant meals. d. Not counted. Stock is not a final good or service. (The broker’s commission, however, would be counted in GDP, as ―C‖ if a household paid the commission.) e. Not counted. The property itself was not produced. f. Counted in GDP. The service provided by the real estate agent is counted as part of ―C.‖ (Notice that the purchase price of the property is not counted, since it is just represents an exchange of an existing good, not something newly produced.) g. Not counted. Not a transaction for the marketplace. h Counted in GDP; ―NX‖ i. Not counted. Social Security payments are transfer payments, not government purchases....
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## This note was uploaded on 04/20/2009 for the course ECON 2006 taught by Professor Rdcothren during the Fall '08 term at Virginia Tech.

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CH4-8 - CHAPTER 4 PROBLEM SET HALL AND LIEBERMAN 4 TH...

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