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Quiz 8 :

The Keynesian Short-Run Policy Model: Demand-Side Policies

Quiz 8 :

The Keynesian Short-Run Policy Model: Demand-Side Policies

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If society's goal is to make people happier, and higher GDP isn't closely associated with being happier, why do economists even talk about GDP?
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GDP i.e. gross domestic product is the total sum of goods and services produced within the country in a year. GNP i.e. gross national product is total sum of goods and services produced by the citizens of the country irrespective of the borders of the country.
GDP is considered to be measure of economic activity in an economy but it does not measure the social or overall well-being or happiness of individuals in the economy. But still GDP is used because it is one of the most widely accepted measure around the world so comparison between countries is easier. Another reason is GDP gives a numerical figure to economic activity and is easy to calculate.

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Which will be larger, gross domestic product or gross national product?
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GDP i.e. gross domestic product is the total sum of goods and services produced within the country in a year. GNP i.e. gross national product is total sum of goods and services produced by the citizens of the country irrespective of the borders of the country.
GNP is sum of GDP and net foreign factor income i.e. income of domestic people earned abroad minus the income of foreigners earned in domestic country. So, GNP will be greater than GDP if domestic people are earning more than what foreigners are earning in domestic country. And GDP will be greater than GNP if domestic people are earning less than what foreigners are earning in domestic country.

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In "Christianity and Economics: A Review of the Recent Literature," economist John Tiemstra states, "taking good to mean self-perceived happiness derived from economic consumption adopts an ethic that is foreign to biblical Christianity." Your textbook cautions that GDP is not the same as welfare. a. What would you include in an index to measure the welfare of a society that takes into account Christian ethics? b. What would you purposefully not include in that index? (Religious)
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GDP i.e. gross domestic product is the total sum of goods and services produced within the country in a year. GNP i.e. gross national product is total sum of goods and services produced by the citizens of the country irrespective of the borders of the country.
a.As per Christianity, any self-obsessed or interested person is not considered ethical. In order to make the index ethical as per Christianity, other than the parameters of self-happiness, the index should also include benefits to society, environmental development, social welfare, etc.b.The things that would not be included in index make the things article as per the Christianity are mostly the goods like alcohol, tobacco, etc.

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Economists normally talk about GDP even though they know NDP is a better measure of economic activity. Why?
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What expenditure category of production is largest for most countries?
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What's the relationship between a stock concept and a flow concept? Give an example that hasn't already been given in this chapter.
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The United States is considering introducing a value- added tax. What tax rate on value added is needed to get the same revenue as is gotten from an income tax rate of 15 percent?
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In the expenditure approach of GDP, should G (government purchases) be taken into account within the calculation the same way C (consumption) and I (investment) are measured? If not, is there something inherently different about the nature of private and public expenditures? (Austrian)
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What is the largest component of aggregate income for most countries?
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If the government increases transfer payments, what happens to aggregate output?
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The government spends far too much money collecting and organizing statistics. If those statistics were necessary, the private market would collect them. a. Explain the sense in which the above statement is true. b. Who do you think is the major supporter of government collection of data? (Austrian)
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If you add up all the transactions in an economy, do you arrive at GDP, GNP, or something else?
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State whether the following actions will increase or decrease GDP: a. The United States legalizes gay marriages. b. An individual sells her house on her own. c. An individual sells his house through a broker. d. Government increases Social Security payments. e. Stock prices rise by 20 percent. f. An unemployed worker gets a job.
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Your textbook points out that GDP fails to recognize much of the work done in the home, largely by women. Most estimates assign that work great economic value. For instance, one measure, developed by the UN's International Training and Research Institute, calculates that counting unpaid household production would add 30-60 percent to the GDP of industrialized countries and far more for developing countries. a. Why do you think that work done at home is left out, but housing services are not? b. Does it make any difference to how women are treated and thought about that work done at home is not counted in GDP? c. If you were valuing the services of a housespouse, how would you go about measuring the value of those services? (Feminist)
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Find consumption expenditures (as a percent of GDP) for the following countries. (Requires research.) a. Mexico b. Thailand c. Poland d. Nigeria e. Kuwait
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There are three firms in an economy: A, B, and C. Firm A buys $250 worth of goods from firm B and $200 worth of goods from firm C, and produces 200 units of output, which it sells at $5 per unit. Firm B buys $100 worth of goods from firm A and $150 worth of goods from firm C, and produces 300 units of output, which it sells at $7 per unit. Firm C buys $50 worth of goods from firm A and nothing from firm B. It produces output worth $1,000. All other products are sold to consumers. a. Calculate GDP. b. If a value-added tax (a tax on the total value added of each firm) of 10 percent is introduced, how much revenue will the government get? c. How much would government get if it introduced a 10 percent income tax? d. How much would government get if it introduced a 10 percent sales tax on final output?
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You've been given the following data: img From these data, calculate GDP, GNP and NDP.
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Unlike GDP, the "Genuine Progress Indicator" measures the costs as well as the benefits of economic growth by accounting for how production and consumption create social ills such as inequality and create environmental problems that threaten future generations, such as global warming and the depletion of natural resourses. GPI adjusts GDP downward to account for these costs, along with underemployment and thea. In your opinion, does gross national product per capita or the Genuine Progress Indicator provide a better measure of economic progress? b. Why? (Radical)
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If the United States introduces universal child care, what will likely happen to GDP? What are the welfare implications?
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Explain the sense in which GDP accounting is an institution (see the Oxford Dictionary of the English Language for a precise definition of an institution). a. How does GDP as an institution shape our understanding of the economic system? b. Who benefits from using GDP accounting as a measure of welfare? (Institutionalist)
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