SOLUTIONS (1)

SOLUTIONS (1) - workplace It also does not include tasks...

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ECO2013 (Calhoun) Solutions 1. b. The sale of a used car would not be considered part of GDP unless it was refurbished and sold for a higher price than what was paid for it. 2. b. The sale of new homes is always considered in GDP calculations. Realtor fees would be included in GDP for the sale of used homes had they been used. 3. c. Important: d. is not correct because GNP includes everything in GDP produced by U.S. citizens as well as production by U.S. citizens in foreign countries. 4. a. Remember the investment component of GDP includes business investment in new machinery, equipment and buildings as well as the purchase of new homes. 5. d. Nominal GDP = Real GDP + Inflation so we don’t know if real GDP rose, pr ices increased or a combination of both. 6. c. The GDP deflator is a broader measure and is therefore preferred when measuring inflation. 7. a. and d. GDP does not take into account how many hours are worked or the conditions of the

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Unformatted text preview: workplace. It also does not include tasks done within a household by the family living in the household. Chores would be included if a maid was hired, though. 8. b. and c. 9. c. 10. b. and d. 11. b. The only factor that changes in the two equations is the number of people employed. The number of people employed increases. 12. c. 13. b. and c. 14. d. Rewrite the equation as nominal = real +inflation. If nominal increased by 3% and inflation is positive, then real has to increase by less than 3%. 15. a., b. and d. Remember c. is a factor that causes the demand curve for a particular good to slope downward, not the aggregate demand curve. 16. e. 17. c. Macroeconomics Test 2 Review (Calhoun) – Fall 2010 2 18. b. Nominal = real + inflation 19. a. and c. 20. a. and d. If the dollar appreciates, then it will cost us less to buy Chinese goods. This will lead to an increase in imports to the U.S. from China. 21. d. 22. d. 23. e. 24. d....
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