Question

2) The following table provides data for an economy in a certain year 1,000 700 600 Consumption expenditures Government purchases of goods and services Construction of new homes and apartments Sales of existing homes and apartments 500 Government payments to retirees Household purchases of durable goods Beginning-of-year inventory End-of-year inventory Business fixed investment 600 300 Given the data in the table, compute the investment component of GDP A) 900 B) 400 C) 300 D) 800 3) The following table provides data for an economy in a certain year 1,000 700 600 Consumption expenditures Government purchases of goods and services Construction of new homes and apartments Sales of existing homes and apartments Exports Government payments to retirees Household purchases of durable goods Beginning-of-year inventory End-of-year inventory Business fixed investment 300 600 300 Given the data in the table, compute the value of GDP A) 2,500 B) 2,700 C) 2,600 D) 2,400 4) An economy produces only 1,000,000 computers valued at $2,000 each. Of these, 200,000 are sold to consumers, 300,000 are sold to businesses, 300,000 are sold to the government, and 100,000 are sold abroad. No computers are imported. At the end of the year, the computer manufacturers hold the unsold computers in inventory. What is the value of GDP? A) S1.8 billion B) S0.9 billion C) S1.0 billion D) S2.0 billion

Answer 1

2> A

Reason

The construction of new home and apartment is 500, change in inventory is 600-500=100 and business fixed investment is 300. Thus, it will be 500+100+300=900.

3> We know, GDP = C+G+I+X-M

where C=Consumption, G=government spending, I=Investment, X=Export and M=import

Thus, GDP will be 1000+700+500+100+300+500-600=2500

So, A is the correct answer.

4> Increase in the inventory even though it gets unsold are counted in the GDP.

Goods sold abroad is export and thus part of GDP.

Also, computers sold to the business is also end product and thus part of GDP.

So, the contribtion will be 2 Billion

Thus, D is correct.