List and compare the four components of the expenditure approach to calculating GDP
What will be an ideal response?
The 4 parts can be summarized according to the formula GDP = C + I + G + (X - M). The first part, C, is consumption expenditure, which measures household spending and is the largest component accounting for around 70 percent of GDP. The next category, I, is investment and refers to the purchase of new capital, the purchase of new homes and changes in inventories. This fluctuates a great deal but generally accounts for 15 to 20 percent of GDP. Next is G, which government expenditure on goods and services. This component includes purchases by all levels of government on new goods and services and is about 20 percent of GDP. The final category,
(X - M), is net exports. In it, exports are added and imports are subtracted. This component is typically negative in the United States because we typically run a trade deficit. It is generally around -1 to -5 percent or so of GDP.
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a. marginal labor cost is greater than the wage rate. b. demand curve for labor is perfectly elastic at the going market wage. c. marginal revenue product of labor is equal to the wage rate. d. labor usage is greater than that of a firm that is competitive in the labor market.
When a U.S. restaurant purchases French wine and the French wine company uses the proceeds to buy U.S. government debt, U.S. ________ and there is a capital ________ the United States.
A. exports increase; outflow from B. imports increase; inflow to C. imports decrease; inflow to D. imports increase; outflow from
Consider the market for wheat which is a perfectly competitive market. Is the market demand curve the same as the demand curve facing an individual producer? If not, explain how and why they are different? Illustrate your answer graphically
What will be an ideal response?
In open economies
A) saving and investment are necessarily equal. B) as in a closed economy, saving and investment are not necessarily equal. C) saving and investment are not necessarily equal as they are in a closed economy. D) saving and investment are necessarily equal contrary to the case of a closed economy. E) investment always refers to the domestic stock market.