QUIZ_1 - C Calculate nominal GDP using the income approach...

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NAME__________________________________ UTEID__________________________________ ECONOMICS 304L:INTRODUCTION TO MACROECONOMICS FALL 2006 DR. WOLITZ QUIZ 1 : Friday, September 15: This QUIZ is worth a total of 12 points. 3 o'clock class 1.Suppose that the economy of Literaria produces three goods: trees, paper and books. The economy of Literaria cuts down trees in order to make paper and uses all its paper for books. The income and expenditure accounts for each of the three industries are given in the TABLE below: (4 POINTS) Expenditures Receipts (billions) (billions) Tree industry Wages $80 $100 Dividends $20 Interest $ 0 Paper industry Wages $100 $250 Purchases of trees $100 Dividends $40 Interest $10 Book industry Wages $150 $500 Purchases of paper $250 Dividends $50 Interest $50 A. Calculate nominal GDP using the final goods (expenditure) approach. B. Calculate nominal GDP using the value-added approach.
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Unformatted text preview: C. Calculate nominal GDP using the income approach. D. Compare the answers. Does the comparison seem sensible? Why or why not? 2. Starting with nominal GDP , for the US economy, show what you have to subtract and/or add to get to DISPOSABLE PERSONAL INCOME . Show EACH STEP clearly below. (5 POINTS) GDP 3. Here is an economy that produces only shirts, pizza and beer. You have the following information for two years. (3 POINTS) Output Output Price Price 2004 2005 2004 2005 Shirts 6 5 $1.00 $.50 Pizza 10 12 .50 $1.00 Beer 2 3 $5.00 $5.00 A. Using the information above, calculate the nominal GDP for 2004 . B. Using the information above, calculate real GDP for 2005 using 2004 as the base year. C. What was the percentage increase in real GDP from 2004 to 2005 using 2004 as the base year?...
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