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ps1 - D EPARTMENT OF E CONOMICS U NIVERSITY OF C ALIFORNIA...

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D EPARTMENT OF E CONOMICS U NIVERSITY OF C ALIFORNIA , B ERKELEY F ALL 2009 ECON 182 Problem Set 1 Due in class on Thursday, September 10 at the beginning of lecture . Students that show their work and write neatly will be graded favorably. Please write your full name , GSI, and section time on your problem set. 1 National Income Accounting GDP is the value of all final goods and services produced domestically and sold on the market in a given time period. The national income identity for GDP is From the definition, we know GDP includes all domestically produced goods, if they also satisfy the other rules. In the above accounting identity, why do we have a component of net exports but not total exports ? (i.e., why not ?) 2 Accounting Algebra An imaginary country Cowia produces milk. The annual yield is 50 gallons. Of the 50 gallons, Cowia households consume 15, while the government consumes 5. Cowians import 10 barrels of wheat from the rest of the world. The price of milk is 0.5 bushel of wheat per gallon. Assume that
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