Answer to Question #211385 in Macroeconomics for Corni

Question

Q1.If nominal GDP in 2005 exceeds nominal GDP in 2004, did real output rise? Did prices rise?

Q2.If you buy a $20,000 Toyota that was produced entirely in Japan, does this affect Ghana’s

GDP? Show how this expenditure would affect the appropriate expenditure categories that

make up GDP.

Q3.What contributes more when measuring GDP, a new diamond necklace purchased by a

wealthy person or a bottle of Pepsi purchased by a thirsty person? Why?

Q4.If your neighbor hires you to watch her kids instead of doing it herself, what will happen to

GDP? Did output! production change? Briefly explain your answer. 

Answer 1

1: We can't be sure of what changed because there is no enough information to determine what happened to the real output.

2: There will be no effect on Ghana's GDP. Buying Toyota will increase consumption and lower net exports in Ghana.

Buying Toyota from Japan will increase consumption by 20 000 and reduce exports by 20000 in Ghana, thereby not affecting Ghana's GDP.

3:A new diamond necklace purchased by a wealthy person. This is because GDP measures market value.

4:The GDP will rise. The output will rise because watching the kids was a market transaction.