Econ 100B Section 3 Answers

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: de I bought from a kid’s lemonade stand i. These kids are most likely evading taxation(!), so it wouldn’t be accounted for. d. The orange I bought today i. Whole Foods goods and services sold today are accounted for in 2014 GDP. C. Expenditure Approach 1) Equation: Y (National Income)= C (Consumption) + I (Income) + G (Government Purchases) + NX (Net Exports = exports – imports) 2) What are the three categories of Consumption? a) (15%) Durable Goods (cars, cell phones, etc) Last more than three years normally. Most volatile. b) (30%)Non- Durable Goods (have shelf lives, food, gas, etc) c) (55%) Services (rent, car payments, insurance, etc) - least volatile 3) What are the three categories of Investment? a) Business Fixed Investment a. Current spending on (1) new equipment, (2) new structures and (3) new intellectual property b) Residential Fixed Investment a. Current spending on new housing units c) Inventory Investment a. Current spending on additional holding or raw materials, parts, and finished goods. 4) What are the two categories of Government Spending? a) Federal Government Purchases – fiscal policy b) State and Local Government Purchases • Bonus: What isn’t included here? : NO Transfers included (EITC, welfare, Social Security, unemployment, etc). To determine if it should be included, ask, is there some service or good being bought? Or are we just redistributing wealth? SPRING 2014 ECONOMICS 100B GSI: KRISTYN ABHOLD 5) Define the following variables used to calculate Net Exports: a) Exports:...
View Full Document

This note was uploaded on 02/25/2014 for the course ECON 100B taught by Professor Wood during the Spring '08 term at University of California, Berkeley.

Ask a homework question - tutors are online