Economic

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Part 1

1. If U.S. GDP exceeds U.S. GNP, then foreigners produce more in the United States than U.S. citizens produce in the rest of the world. Do you think the point is correct? Why?
I think the point is correct. GDP included the money value of final goods and services product by the citizen and foreigners for the marketplace within a national¡¯s borders during a given period of time. GNP included the money value of final foods and services product by citizens within a national¡¯s borders and in the rest of the world. In this case, the GDP exceeds GNP, the final goods and services product by the citizens are the same. So the foreigners produce more in the U.S. than U.S. citizens¡¯ product in the rest of the world.

2. When the city of Chicago purchases a new school building, the investment component of GDP increases. Do you think this sentence is correct? Why?

I don¡¯t think this sentence is correct. This is not the investment component of GDP increases. GDP = Consumption + Investment + Government purchase + Net export. The city of Chicago purchases a new school building is the government purchase component of GDP increases.

3.If the Bureau of Labor Statistics failed to recognize the increase in memory, power, and speed of newer model computers, in which direction would the CPI be biased? What do we call this type of bias?

The increase in memory, power and speed of newer model computers would increase the CPI and the inflation rate. But now the Bureau of Labor Statistics failed to recognize it, so the CPI is decrease. This is the bias of ¡°technical¡±. Because this case does not have to do with the way the date are collected and the details of the calculations.

4.Which number below can be or cannot be counted into GDP? Why? i. Mr. Chen is an unemployed. He lives with $5,000 alms supplied by government. ii.Mr. Shen, the antique broker, earned 10% commission by selling the Tang dynasty antique that is worth $500,000....
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