ECON 104 Study Guide - Quiz Guide: Underemployment, Government Spending, Working Poor

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28 Jul 2016

School

George Mason University

Department

Economics

Course

ECON 104

Professor

Rustici/ Gillespie

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Document Summary

Components of gdp the 4 major sectors of the economy are: households, business firms, government, and international trade. Gdp = c + i + g + (x-m) X-m can be replaced with net exports (ne) Gdp = w + i + r + p. Net domestic income + net foreign factor income. Net foreign factor income is the value of ud resources purchased by foreigners, minus the value of foreign resources purchased by americans. National income (indirect business taxes [sales taxes, import tariffs, etc. ] +corporate profits + interest and miscellaneous payments + social security taxes) + (transfer payments [pensions, social security checks, etc. ] Personal income income taxes that households pay. Everyone in the population is either employed, unemployed, or not in the labor force. Labor determined by census bureau and the bureau of labor statistics. Means one has a job (even it is for no pay such as a family business)

Related Questions

5. Saving and net flows of capital and goods In a closed economy, saving and investment must be equal, but this is not the case in an open economy. In the following problem, you will explore how saving and investment are connected to the international flow of capital and goods in an economy. Before delving into the relationship between these various components of an economy, you will be asked to recall some relationships between aggregate variables that will be useful in your analysis. Recall the components that make up GDP. National income (Y) equals total expenditure on the economy's output of goods and services. Thus, where C = consumption, I = investment, G = government purchases, X = exports, M = imports, and NX = net exports: Y = Also, national saving is the income of the nation that is left after paying for . Therefore, national saving (S) is defined as: S = Rearranging the previous equation and solving for Y yields Y = . Plugging this into the original equation showing the various components of GDP results in the following relationship: S = This is equivalent to S = , since net exports must equal net capital outflow (NCO, also known as net foreign investment). Now suppose that a country is experiencing balanced trade. Determine the relationships between the entries in the following table, and enter these relationships using the following symbols: > (greater than), < (less than), or = (equal to). Outcomes of Balanced Trade Imports Exports 0 Net Exports Y C+I+G Investment Saving Net Capital Outflow 0

ochreduck773

There are five questions. Each question is worth one point. Consider the following list of data for a country for a given year. Amounts are in billions of dollars. Your answers should be based on the U.S. national-accounts. In your answers, you may refer to the items by the abbreviations shown.

Item	Amount
Consumption (C)	65
Depreciation (DEPR)	20
Government Consumption and Gross Investment (G)	18
Gross Private Domestic Investment (I)	30
Household Production (HP)	20
Household Purchases of Stocks and Bonds (ST)	50
Interest (INT)	2
Net Exports of Goods and Services (NX)	-3
Net Income of Foreigners (NIF)	-1
Profits (PROF)	7
Proprietorsâ Income (PRIN)	4
Rent (RENT)	4
Sales Taxes (STAX)	4
Wages (W)	70

1. Compute national income. Show your work.

2. Compute GDP via the âresource-cost incomeâ approach. Show your work.

3. Compute GDP via the âexpendituresâ approach. Show your work.

4. Two items in the list are negative. How can these items be negative and yet be components of GDP? Could these items be positive and still be components of GDP? Explain carefully and thoroughly.

5. Two items in the list are not part of the answers to 1-3. Which are the items and why do they not enter the answers? Explain carefully and thoroughly.

jadecamel344

For each of the following, place an X to indicate the component affected and an R (increase) or an L (decrease) to show whether the AD curve shifts Right or Left. Consider only the primary effect. Consumption (C), Investment (I), Government spending (G), and Net Exports (NE):

Factor	C	I	G	NE	R or L
Real interest rate decreases
Consumers and executives become more confident in the economic future
The stock market rises
China's economic growth slows
Congress increases spending in the current fiscal year
Tariffs are imposed by many countries to protect domestic employment
The US Import/Export bank eliminates guarantees for loans to foreign airlines to purchase Boeing aircraft
Congress enacts tax incentives for firms purchasing new equipment and facilities

ceruleanpig915

ECON 104 Study Guide - Quiz Guide: Underemployment, Government Spending, Working Poor

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