Answer to Question #3666 in Macroeconomics for HASFANIZAM BIN HASHIM

Question

Question 1

What component of GDP (C, I, G, X, M) if any, would each of the following transactions affect? Explain your answer clearly.

a) Toyota issues new shares of stock to finance the construction of a car plant.
b) You buy a new Toyota Camry.
c) The government pays out government servants’ salary.
d) You spend the entire weekend cleaning your house.


Question 2

Unemployment can be avoided as long as businesses are willing to accept lower product prices, and workers to accept lower wage rates. Critically evaluate this statement.



Question 3

Use the data contained in Table 1 on the economy of Westeralia to determine the following national income accounting aggregates:

Table 1:
Items Dollar million
Exports 88.15
Subsidies 160.50
Government spending 126.45
Private final consumption spending 324.45
Gross private investment 106.50
Statistical discrepancy 7.05
Imports 99.15

a) Net export.
b) Gross domestic product using the expenditure method.
c) With respect to national income accounting, explain what is meant by the “statistical discrepancy” and why it is necessary?


Question 4

Evaluate and explain as accurately as you can the manner in which each of the following individual would be affected by fairly rapid inflation?

a) A department store assistant
b) A pensioner who receives fixed monthly income.
c) The owner of an independent coffee shop

Answer 1

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