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  3. Liberty ECON 214 Problem set #1 Answers Complete Solutions

Liberty ECON 214 Problem set #1 Answers Complete Solutions

 

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Problem set #1

1) If Joan receives a Social Security check, would we include that transfer payment from the government in this year’s GDP? Why or why not?

2) In the following situations, explain what is counted in this year’s GDP:

A. You bought a new Wii at GameStop last year and resold it on eBay this year

B. You spend your Saturday cutting grass at your house

C. You purchase an Investing for Dummies book at Barnes and Noble

D. You purchase a historic home using the services of a real estate agent

E. You purchase a tire to replace the damaged tire on your car

3) To which component of GDP expenditure (C, I, G, or NX) does each of the following belong?

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a. a new home

b. a parachute purchased by the US. Army

c. wheat imported from Canada

d. a cheeseburger you purchase for lunch

4) Many goods and services are illegally sold or legally sold but not reported to the government. How would increased efforts to count those goods and services affect our calculation of GDP? Would it increase, decrease or stay the same? Why?

5) Fill in the missing data in the following table: (Round to the nearest dollar)

YearNominal GDPReal GDPGDP Deflator
200910000093
2010117000100
2011125000120000
2012150000119
2013152000136
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