Economics

Business

Quiz 20 :

Measuring a Nations Wellbeing and the Price Level

Quiz 20 :

Measuring a Nations Wellbeing and the Price Level

Question Type
search
arrow
National Income Accounting Define gross domestic product. Determine which of the following would be included in the 2011 U.S. gross domestic product: a. Profits earned by Ford Motor Company in 2011 on automobile production in Ireland b. Automobile parts manufactured in the United States in 2011 but not used until 2012 c. Social Security benefits paid by the U.S. government in 2011 d. Ground beef purchased and used by McDonald's in 2011 e. Ground beef purchased and consumed by a private U.S. household in 2011 f. Goods and services purchased in the United States in 2011 by a Canadian tourist
Free
Essay
Answer:

Answer:

GDP, or gross domestic product, is a measure of the value of all final goods and services produced within a country during a specified period of time. Certain goods and services are excluded from the measurement for various reasons, as is investigated below.
(a)These products are not produced domestically and are thus not counted in the gross domestic product.
(b)GDP measures the value of all final goods and services produced in a given year. Thus, if a final product is produced in 2011, it will be counted in 2011's GDP, despite not being sold until 2012. Specifically, car parts that will be sold directly to consumers would count in GDP. However, if these were intermediate goods that will be assembled into a car, they would be excluded from GDP.
(c)Government transfers, such as social security, are excluded from government spending and thus excluded from GDP. They do not directly reflect the value of any good or service.(d)When a restaurant firm, such as McDonald's, purchases food inputs, they are considered intermediate goods. Intermediate goods do not get counted in GDP to avoid double counting.(e)When a household purchases and consumes food, it is used as a final good. Thus, this would be counted in the GDP.
(f)A foreign traveler in the United States will purchase goods just as any resident would. Specifically, this would get counted in GDP as an export.

Tags
Choose question tag
close menu
arrow
EXPENDITURE APPROACH TO GDP Given the following annual information about a hypothetical country, answer questions a through d. img a. What is the value of GDP? b. What is the value of net domestic product? c. What is the value of net investment? d. What is the value of net exports?
Free
Essay
Answer:

Answer:

Expenditure approach to GDP:
a.The value of GDP:
img Thus, the value of GDP is
img billion.
b.The value of net domestic product:
img Thus, the value of net domestic product is
img billion.
c.The value of net investment:
img Thus, the value of net investment is
img billion.
d.The value of net exports:
img Thus, the value of net exports is
img billion.

Tags
Choose question tag
close menu
arrow
GDP PRICE INDEX The health expenditure component of the GDP price index has been rising steadily. How might this index be biased by quality and substitution effects? Are there any substitutes for health care?
Free
Essay
Answer:

Answer:

Increasing Health Care Expenditure and Price index
The share of expenditure on health care has increased steadily over time in households' budget. Over a time period, quality of health care has improved along with the increase in the cost to avail the facility.
Exclusion of quality in health care would lead to biasness, while evaluating a price index. This is because, cost of health care is subject to the quality of health care available, and both are positively related.High cost of health care facility may cause households to shift to other alternatives of health care, such as natural therapies instead of advanced health care instruments.

Tags
Choose question tag
close menu
arrow
NATIONAL INCOME ACCOUNTING Identify the component of aggregate expenditure to which each of the following belongs: a. A U.S. resident buys a new automobile manufactured in Japan b. A household's purchase of one hour of legal advice c. Construction of a new house d. An increase in semiconductor inventories over last year's level e. A city government's acquisition of 10 new police cars
Essay
Answer:
Tags
Choose question tag
close menu
arrow
LEAKAGES AND INJECTIONS What are the leakages from and injections into the circular flow? How are leakages and injections related in the circular flow?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
Nominal GDP Which of the following is a necessary condition- something that must occur-for nominal GDP to rise? Explain your answers. a. Actual production must increase. b. The price level must increase. c. Real GDP must increase. d. Both the price level and actual production must increase. e. Either the price level or real GDP must increase.
Essay
Answer:
Tags
Choose question tag
close menu
arrow
GDP AND DEPRECIATION What is gross about gross domestic product? Could an economy enjoy a constant-or growing-GDP while not replacing worn-out capital?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
INVESTMENT Given the following data, answer questions a through c. img a. What is the value of gross private domestic investment? b. What is the value of net investment? c. Are any intermediate goods counted in gross investment?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
Case Study: Price Check on Aisle 2 What is the hedonic method and why is it sometimes used to track changes in the consumer price index?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
CONSUMER PRICE INDEX One form of the CPI that has been advocated by lobbying groups is a "CPI for the elderly." The Bureau of Labor Statistics currently produces only indexes for "all urban households" and "urban wage earners and clerical workers." Should the BLS produce such an index for the elderly?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
LIMITATIONS OF NATIONAL INCOME Accounting Explain why each of the following should be taken into account when GDP data are used to compare the "level of well-being" in different countries: a. Population levels b. The distribution of income c. The amount of production that takes place outside of markets d. The length of the average work week e. The level of environmental pollution
Essay
Answer:
Tags
Choose question tag
close menu
arrow
img
Not Answered

There is no answer for this question

Tags
Choose question tag
close menu
arrow
INCOME APPROACH TO GDP How does the income approach to measuring GDP differ from the expenditure approach? Explain the meaning of value added and its importance in the income approach. Consider the following data for the selling price at each stage in the production of a 5-pound bag of flour sold by your local grocer. Use the value-added approach to calculate the final market value of the flour. img
Essay
Answer:
Tags
Choose question tag
close menu
arrow
INVESTMENT In national income accounting, one component of investment is net changes in inventories. Last year's inventories are subtracted from this year's inventories to obtain the net change. Explain why net inventory increases are counted as part of GDP. Also, discuss why it is not sufficient to measure the level of inventories only for the current year. (Remember the difference between stocks and flows.)
Essay
Answer:
Tags
Choose question tag
close menu
arrow
Case Study: GDP and The State of the USA Is The State of the USA designed to replace GDP as the primary measure of economic performance? Reference Case Study: Public Policy GDP and The State of the USA GDP estimates have been refined for decades and are arguably the most complex data aggregation effort in the world. But they have their limits, as discussed already, and they have their critics. One criticism is that GDP leaves out much of what's going on in the nation-with health care, the environment, the family, energy use, and so on. One challenge to GDP as the primary indicator of national progress is coming from a nonprofit group that has developed a Web site to bring together hundreds of indicators. The idea is to help Americans assess the progress of the United States by using quality data selected by experts. First, a little background. In 2003, a team at the U.S. Government Accountability Office, the investigative arm of Congress, was looking for alternatives to GDP to assess national progress. The team became an independent nonprofit agency in 2007 and took the name "The State of the USA." With startup funding from the Gates, Hewlett, MacArthur, and Rockefeller foundations, the group set out to identify data that would amount to a report card on how the country is doing in specific areas-such as health care, education, the environment, safety, energy, transportation, the economy, the family, and so forth. The goal is to help citizens and leaders assess what progress has been made and where we need to improve. The effort got a big boost from a small provision in the massive 2010 health care bill that requires Congress to help finance and oversee a "key national indicator system." State of the USA will become that system, overseen by the National Academy of Sciences, a group of preeminent scholars established by Abraham Lincoln in 1863 to "investigate, examine, experiment, and report upon any subject of science or art" whenever called upon to do so by any department of the government (half the 20 economists in the National Academy are Nobel laureates). Along with the federal authorization came federal funding totaling $70 million between 2010 and 2018. The objective is not so much to replace GDP as the primary measure of economic performance, but to broaden the conversation and the debate by including many more data series. Instead of just having one gauge on the dashboard, GDP, there would be many gauges. The State of the USA Web site went live in 2010, and is accessible for free. Eventually, The State of the USA plans to offer about 300 indicators. Rather than develop original data, the site compiles and displays data gathered by others. Despite the number of data series, the group says the site will be selective, not encyclopedic. For example, in health care alone the government collects about 1,000 different measures. The State of the USA offers what they claim are the 20 most crucial health care measures. The group says its objective is not to interpret the data but to disseminate it in a strictly nonpartisan manner. img The idea is to offer data in a form that can be easily shared to promote as wide a distribution as possible. Data will be available on the national level, state level, and as far down the jurisdictional chain as possible. For example, one of the 20 health care measures reports smoking rates by state (West Virginia is the highest and Utah is the lowest). The State of the USA will also offer a variety of interactive features to encourage exploration, such as motion charts with audio tutorials focusing on health costs and outcomes for the developed world. Check out the site and see what you think.
Essay
Answer:
Tags
Choose question tag
close menu
arrow
Consumer Price Index Calculate a new consumer price index for the data in Exhibit 4 in this chapter. Assume that current-year prices of Twinkies, fuel oil, and cable TV are $0.95/package, $1.25/gallon, and $15.00/month, respectively. Calculate the current year's cost of the market basket and the value of the current year's price index. What is this year's percentage change in the price level compared to the base year? Reference Exhibit 4: img
Essay
Answer:
Tags
Choose question tag
close menu
arrow
PRICE INDEXES E-readers and HDTVs have not been part of the U.S. economy for very long. Both goods have been decreasing in price and improving in quality. What problems does this pose for people responsible for calculating a price index?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
Login to www.cengagebrain.com and access the Global Economic Watch to do this exercise. Global Economic Watch Go to the Global Economic Crisis Resource Center. Select Global Issues in Context. In the Basic Search box at the top of the page, enter the phrase "G.D.P. R.I.P." On the Results page, go to the Global Viewpoints Section. Click on the link for the August 10, 2009, article "G.D.P. R.I.P." What does the author mean by "gross domestic transactions"?
Essay
Answer:
Tags
Choose question tag
close menu
arrow
Login to www.cengagebrain.com and access the Global Economic Watch to do this exercise. Global Economic Watch Go to the Global Economic Crisis Resource Center. Select Global Issues in Context. In the Basic Search box at the top of the page, enter the phrase "price index." Write a summary of an article about a price index in a foreign country.
Essay
Answer:
Tags
Choose question tag
close menu
arrow
National Income Accounting Explain why intermediate goods and services usually are not included directly in GDP. Are there any circumstances under which they would be included directly?
Essay
Answer:
Tags
Choose question tag
close menu
Showing 1 - 20 of 22