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Chapter 7: Q5. (page 153)
Using the following national income accounting data, compute (a) GDP, (b) NDP, and (c) NI. All figures are in billions.
The gross domestic product of the economy for the year is $343.7 billion.
The NDP of the economy is $331.9 billion.
The economy’s national income is $329.7 billion.
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What is the difference between gross private domestic investment and net private domestic investment? If you were to determine net domestic product (NDP) through the expenditures approach, which of these two measures of investment spending would be appropriate? Explain.
Assume that the total value of the following items is \(600 billion in a specific year for Upper Mongoose: net exports = \)50 billion; value of new goods and services produced in the underground economy = \(75 billion; personal consumption expenditures = \)300 billion; value of the services of stay-at-home parents = \(25 billion; gross domestic investment = \)100 billion; government purchases = $50 billion. What is Upper Mongoose’s GDP for the year? What is the size of the underground economy as a percentage of GDP? By what percentage would GDP increase if the value of the services of stay-at-home spouses were included in GDP?
Use the concepts of gross investment and net investment to distinguish between an economy that has a rising capital stock and one that has a falling capital stock. Explain: “Though net investment can be positive, negative, or zero, it is impossible for gross investment to be less than zero.”
Which of the following are included in this year’s GDP? Which are excluded? Explain your answers.
a. Interest received on an AT&T corporate bond.
b. Social Security payments received by a retired factory worker.
c. Unpaid services of a family member who painted the family home.
d. Income of a dentist from the dental services she provided.
e. A monthly allowance that a college student receives from home.
f. Money received by Josh when he resells his nearly brand-new Honda automobile to Kim.
g. The publication and sale of a new college textbook.
h. An increase in leisure resulting from a 2-hour decrease in the length of the workweek, with no reduction in pay.
i. A $2 billion increase in business inventories.
j. The purchase of 100 shares of Alphabet (the parent company of Google) stock.
Suppose GDP is \(5.0 trillion, depreciation is \)1 trillion, and gross output (GO) is $17.25 trillion.
a. What is the value of all stages of production and distribution except for final sales of goods and services?
b. What is the dollar value of the economic activity taking place at every stage of production and distribution?
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