HW2_Ch2Game_Key

# HW2_Ch2Game_Key - Name Section Number Recitation Leader's...

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Name: ____________________________________ Section Number: ____ Recitation Leader’s Name: _____________________________ Homework 2, Due January 30 at the beginning of class 1. What are the three approaches to measuring GDP? Explain how they give the same measurements for measuring economic activity. The three approaches to measuring GDP are: expenditure approach, product approach and income approach. The approaches are the same because the amount produced in a period must equal the amount sold in the period and what the seller receives must equal what the buyers spend. 2. If C = \$500, I = \$150, G = \$100, NX = \$40, and GNP = \$800, how much is NFP? GDP = C+I+G+NX=500+150+100+40=790. Thus, because GDP=GNP-NFP, so NFP=GNP-GDP=800-790=10. 3. If a person buys a used car from a car dealership, is the value of the car counted towards GDP? Is any portion of the transaction counted towards GDP? If a person buys a used car from a car dealership, the value of the car is not counted towards GDP. However, the portion of the transaction that is paid to the dealership is counted towards GDP because it is considered a service.

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## This note was uploaded on 09/15/2009 for the course ECON 304 taught by Professor Stone,mistyriano,alejandro during the Fall '07 term at Penn State.

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HW2_Ch2Game_Key - Name Section Number Recitation Leader's...

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