Sonia Bhardwaj
Economics_01_002
Prof. Jonas Shaende
04/26/2017
Problem Set #3:
- Question 1: o Which of the following transactions will be included in GDP for the United States?
Coca-Cola builds a new bottling plant in the United States.
• When Coca-Cola builds a new bottling plant, it is categorized as investment spending and included in the GDP.
Delta sells one of its airplanes to Korean Air
• If Delta sells one of its airplanes to Korean Air, this transaction is not included in the GDP, because it does not represent production during the current time. The airplane would have been included in the GDP when it was produced, not when it is a product already produced for sale.
Ms. Moneybags buys an existing share of Disney stock
• When …show more content…
export and is entered as such in U.S. GDP.
An American buys a bottle of French perfume
• When an American buys a bottle of French perfume, it is consumption expenditure as measured by GDP. But since it does not represent production in the United States, it is also deducted from GDP as an import. The net effect of the transaction does not change GDP in the United States.
A book publisher produces too many copies of a new book; the books do not sell this year, so the publisher adds the surplus books to inventories.
• If a book publisher produces too many copies of a new book and the books do not sell in the year they are produced, the publisher adds the surplus books to inventories. These books are considered investment spending and added to GDP. It is as if the publisher bought the books itself.
- Question 2: o A country’s labor force is the sum of the number of employed and unemployed workers. The accompanying table provides data on the size of the labor force and the number of unemployed workers for different regions of the United
Economics_01_002
Prof. Jonas Shaende
04/26/2017
Problem Set #3:
- Question 1: o Which of the following transactions will be included in GDP for the United States?
Coca-Cola builds a new bottling plant in the United States.
• When Coca-Cola builds a new bottling plant, it is categorized as investment spending and included in the GDP.
Delta sells one of its airplanes to Korean Air
• If Delta sells one of its airplanes to Korean Air, this transaction is not included in the GDP, because it does not represent production during the current time. The airplane would have been included in the GDP when it was produced, not when it is a product already produced for sale.
Ms. Moneybags buys an existing share of Disney stock
• When …show more content…
export and is entered as such in U.S. GDP.
An American buys a bottle of French perfume
• When an American buys a bottle of French perfume, it is consumption expenditure as measured by GDP. But since it does not represent production in the United States, it is also deducted from GDP as an import. The net effect of the transaction does not change GDP in the United States.
A book publisher produces too many copies of a new book; the books do not sell this year, so the publisher adds the surplus books to inventories.
• If a book publisher produces too many copies of a new book and the books do not sell in the year they are produced, the publisher adds the surplus books to inventories. These books are considered investment spending and added to GDP. It is as if the publisher bought the books itself.
- Question 2: o A country’s labor force is the sum of the number of employed and unemployed workers. The accompanying table provides data on the size of the labor force and the number of unemployed workers for different regions of the United