GDP Homework Problem Set: Due Thursday February 3

GDP Problem Set: Modules 2,10,11

1. In 1980, these are the real figures of GDP that we measured in this country.
             Nominal    Real
   1980    8.8        -0.3
   How would you characterize the overall state of the economy during this year? What accounts for the difference between these two GDP figures (identify difference and calculate actual #)?
   
   
   
    
2. Determine how each of the following transactions would alter the calculation of this year's GDP.
   If it doesn't alter GDP, explain why not. If it does alter GDP, determine which component of GDP the transaction would fall under.
   
    

             a. The government purchases a jet from Boeing, a firm based in Chicago.


             b. The Dow Jones IA rises 9% as investors buy $100 billion worth of stock.

            c. Mr. Potts paints Mrs. Howell's house and she bakes him a fabulous lasagna.


            d. Mr. Potts hires USA Painters to paint Mrs. Howell's house.


            e. Bob Rohrman Ford sells their last of the 2011 models during January 2012.
            f. Education expenses (college tuition) is switched from the Consumption category (C) to   the Investment category (I)




3. Explain why a rise in unintended inventories might be a leading indicator.




4. Draw a simple circular flow model, and list 2 potential leakages from the circular flow.

	2011	2012
College tuition	100*1,000	125*1,100
Bread	100*1	125*1
Houses built	100*10,000	90*9,000

5. Assume 2011 is the base year.
a. What is nominal GDP in 2011?


b. What is Real GDP in 2011?


c. What is nominal GDP in 2012?


d. What is Real GDP in 2012?


e. What is the rate of real economic growth?


f. What is the price deflator for each year?