Gross Domestic Product and Chinese Government
Macro homework No.1, Chapter 16
Spring 2014
!
Problem I
Suppose a person marries his or her gardener and therefore no longer pays him or her for gardening services. GDP______
A. stays the same as long as the services are still provided.
B. increases since the services are now provided for free.
C. decreases since there is no longer a market exchange.
D. stays the same, since services are not included in GDP.
!
Problem II
Peg’s Manicure Manor did 4000 sets of nails in the year 2006 and 4500 sets of nails in the year 2007. The price of a set of nails was $20 in 2006 and $22 in 2007. If the year 2006 is the base year, Peg’s contribution to nominal GDP in 2006 was ______ and in 2007 was
_____.
A. $80,000, $88,000
B. $80,000, $90,000
C. $80,000, $99,000
D. $88,000, $90,000
!
Problem III
Using real GDP to compare the level of economic well being in two countries may be misleading because the value of _____ contributes to economic well being, but is excluded from real GDP.
A. capital goods
B. services
C. leisure
D. restaurant meals
!
Problem IV
Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process:
!
If the corn was grown and the jar of popcorn produced in the year 2005, but the jar was sold at Friendly Groceries in the year 2006, what is the contribution of these transactions to GDP in the year 2005?
A. $0.00
1/2
B. $0.50
C. $1.50
D. $2.50
!
Problem V
Which of the following expenditure should be added into China’s GDP?
A. The Chinese government pays RMB 1 billion in salaries for government workers.
B. The Chinese government pays RMB 1 billion to Social Security recipients.
C. The Chinese government pays RMB 1 billion in interest to holders of Chinese government bonds.
D. The Chinese government pays $1 billion to Saudi
Spring 2014
!
Problem I
Suppose a person marries his or her gardener and therefore no longer pays him or her for gardening services. GDP______
A. stays the same as long as the services are still provided.
B. increases since the services are now provided for free.
C. decreases since there is no longer a market exchange.
D. stays the same, since services are not included in GDP.
!
Problem II
Peg’s Manicure Manor did 4000 sets of nails in the year 2006 and 4500 sets of nails in the year 2007. The price of a set of nails was $20 in 2006 and $22 in 2007. If the year 2006 is the base year, Peg’s contribution to nominal GDP in 2006 was ______ and in 2007 was
_____.
A. $80,000, $88,000
B. $80,000, $90,000
C. $80,000, $99,000
D. $88,000, $90,000
!
Problem III
Using real GDP to compare the level of economic well being in two countries may be misleading because the value of _____ contributes to economic well being, but is excluded from real GDP.
A. capital goods
B. services
C. leisure
D. restaurant meals
!
Problem IV
Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process:
!
If the corn was grown and the jar of popcorn produced in the year 2005, but the jar was sold at Friendly Groceries in the year 2006, what is the contribution of these transactions to GDP in the year 2005?
A. $0.00
1/2
B. $0.50
C. $1.50
D. $2.50
!
Problem V
Which of the following expenditure should be added into China’s GDP?
A. The Chinese government pays RMB 1 billion in salaries for government workers.
B. The Chinese government pays RMB 1 billion to Social Security recipients.
C. The Chinese government pays RMB 1 billion in interest to holders of Chinese government bonds.
D. The Chinese government pays $1 billion to Saudi