AK_Chapter_05 - Real GDP GDP Deflator 2001 $200 $200 100...

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CHAPTER 5 Questions for Review 1. Every transaction has a buyer and a seller. 2. Luxury. Higher market value. 3. $3. 4. It does not affect GDP at all. 5. C + I + G + NX. 6. Not affected by changes in prices, reflects only changes in the amounts. 7. The percentage changes: nominal GDP: 200%; real GDP: 100%; deflator: 50%. 8. People could enjoy more goods and services. Laws that restrict pollution. Problems and Applications 1. a. C. b. I. c. C (+) and I (-). d. C. e. G. f. C (+) and NX (-). g. I. 2. Nothing is produced. 3. Housing provides services for a long time. The logic could apply to any durable good. 4. It would be a double-count. 5. a. Nominal GDP: 2004: $200 2005: $400 2006: $800 real GDP (base year 2001): 2004: $200 2005: $400 2006: $400 GDP deflator: Year Nominal GDP
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Unformatted text preview: Real GDP GDP Deflator 2001 $200 $200 100 2002 $600 $400 150 90 F Chapter 5/Measuring A Nations Income 2004: 100 2005: 100 2006: 200 b. percentage change in nominal GDP: 2005: 100%. 2006: 100%. percentage change in real GDP: 2005: 100%. 2006: 0%. percentage change in GDP deflator: 2005: 0%. 2006: 100%. c. 2005. 6. a. 9.5%. b. 4.0%. c. $972. d. $1,024. e. 5.3%. f. Growth of nominal GDP includes inflation. 7. Higher incomes arent that good when prices are also higher. 8. Many answers are possible. 9. a. $400. b. $350. c. $320. d. $220. e. $150. 10. In India, more is produced at home. 11. GNP. GDP. 12. a. Increased GDP. b. It wouldn't rise as much as GDP. c. Increased self-esteem, e.g., and decreased time with children. Difficult to measure....
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AK_Chapter_05 - Real GDP GDP Deflator 2001 $200 $200 100...

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