Tutorial Chapter 23

# Tutorial Chapter 23 - Nominal GDP for year 3 =(RM14...

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Tutorial Chapter 23 Question 1 1. Money spent by Debbie is included to consumption. As she spends 200\$, GDP rises by RM200. 2. Sara’s spending on a new laptop should be included to investment, because she bought it to produce more goods and services, not for personal use. Investment rises by RM1800 but GDP will stay unchanged, because laptop was bought from China which means it is import (with minus sign). So, we subtract RM1800 and GDP will stay the same. 3. The money spent on a computer will be also included to Investment but the value of the computer will not be included in the GDP because it is last year’s model. So current GDP will stay the same. 4. RM470 million will be included to consumption, RM30 million to investment. GDP rises by RM500 million. Question 2 1. Nominal GDP for year 1 = (RM10 x120) + (RM12 x200) = RM3600 Nominal GDP for year 2 = (RM12 x200) + (RM15 x300) = RM6900
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Unformatted text preview: Nominal GDP for year 3 = (RM14 x180) + (RM18 x275) = RM7470 2. Real GDP for year 1 = (RM10 x120) + (RM12 x200) = RM3600 Real GDP for year 2 = (RM10 x200) + (RM12 x300) = RM5600 Real GDP for year 3 = (RM10 x180) + (RM12 x275) = RM5100 3. GDP deflator for year 1 = (3600/3600) x 100 = 1 x 100 = 100 GDP deflator for year 2 = (6900/5600) x 100 = 1.2321 x 100 = 123.21 GDP deflator for year 3 = (7470/5100) x 100 = 1.4647 x 100 = 146.71 4. Inflation rate is increasing in country X. (not sure about this answer) 5. Economic will be in raise in year 2 since real GDP in year 3 drops. Recession. Question 3 1. GDP=RM180. GDP is the market value of the final goods sold. 2. a)100-0=RM100 b)150-100= RM50 c)180-150=RM30 3. GDP: 100+(150-100)+(180-150) = RM180 GDP is the market value of the final goods sold or the total value added of 3 producers....
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