Purchase Solution

GDP, CPI and Unemployment

Not what you're looking for?

Ask Custom Question

Use the table below: Value in billions
Personal consumption expenditures $1000
Gross private domestic investment $500
Net exports $300
Imports $180
Government purchases of goods and services $280
Transfer payments $90

What is the value of GDP?
b. In each of the following cases, indicate if GDP is affected, under what category and what happens to GDP. Be sure to explain why or why it is not included.
You buy a used textbook from one of your classmates.
You buy a new umbrella.
Ella, a French tourist, has a haircut in a salon in San Francisco.
Oklahoma cleans up after a devastating tornado.
A pension payment to a retired military person

2. Why do some people gain and other people lose from inflation and deflation?

3. a. Define the natural rate of unemployment. Identify three factors that may cause the natural rate to change over time.

b. What is structural unemployment? State the various reasons due to which it can arise in an economy.

Purchase this Solution
Solution Summary

This discussion includes gross domestic product computation, natural rate of unemployment, and identification of losers and winners during inflation and deflation.

Solution Preview

Solution: (please see that attached file.)

GDP = C + I + G + (Net Export)
Consumption (C)
- Personal consumption expenditures $1000
Investment (I)
- Gross private domestic investment $500

Government Purchases (G) (Note: Transfer payments are not included here)
- Government purchases of goods and services $280

Net Export (Note: Imports of $180 is not included here since the account is already Net Exports, and it is assumed that the import ($180) has already been deducted in the Net Exports computation. Including it in the computation is tantamount to double counting.)
- Net exports $300
Add:
Personal consumption expenditures -------------------$1000
Gross private domestic investment ------------------- $500
Government purchases of goods and services ------- $280
Net exports ----------------------------------------------- $300
---------
GDP $2,080 Billion

b. In each of the following cases, indicate if GDP is affected, under what category and what happens to GDP. Be sure to explain why or why it is not included.

You buy a used textbook from one of your classmates.
The GDP ...

Purchase this Solution
Free BrainMass Quizzes
Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

View More Free Quizzes
Related BrainMass Solutions

  • changes in inflation rates, unemployment rates and the RGDP growth rates

    /index.htm#gdp to collect the data on annual average data on CPI index, unemployment rates and real GDP (not the GDP in current dollars) data from year 2004 through 2009 (you need to collect the data from Y2004 to find the rates for Y2005).

  • ECON_Q2

    d. cyclical unemployment, seasonal unemployment, and structural unemployment. e. cyclical unemployment and frictional unemployment. 30.

  • Answers to 4 Exam Questions about Unemployment & Inflation

    If the CPI was 120 last year and is 138 this year, what is the year's rate of inflation? In contrast, suppose that the CPI was 120 last year and is 116 this year. What is this year's rate of inflation?

  • Okun's Law, CPI, and Real Income

    3) If the CPI was 110 last year and is 121 this year, what is this year's rate of inflation? In contrast, suppose that the CPI was 110 last year and is 108 this year. What is this year's rate of inflation?

  • AD-AS diagram

    these are the official numbers as of the last release of both CPI and unemployment rate.

  • Measuring Gross Domestic Product

    (b) What is the rate of inflation between year 1 and year 2 as measured by the change in the CPI? 5. What does the producers price index measure? C. MEASURING UNEMPLOYMENT AND THE UNEMPLOYMENT RATE 1. What are the causes of unemployment? D.

  • Unemployment and Inflation

    The CPI and its components are used to adjust other economic series for price change and to translate these series into inflation-free dollars.

  • Economic Variables: Average Income

    Also the CPI is not forward looking; it is measuring the cost of things in the recent past. CPI, or the inflation rate, are used in calculating the Gross Domestic Product or GDP.

  • current data of the U.S. economy

    Hit "ctrl+F" to get the find box to open and search for the terms "GDP", "unemployment", and "CPI" which is a measure of inflation. Read the paragraphs associated with each variable.

  • Explain the business value of economic indicators

    A negative rate of change in GDP is typically bad news. When an economy produces less than it did in the previous year, it usually means higher unemployment and a lower standard of living for the population.

View More Related Solutions