Reference no: EM133439377

Question 1. Suppose the economy produced 2 goods: baseballs and basketballs. In the first quarter of 2022 (the base period), 4000 baseballs were produced at a value of $17 per baseball, while 3000 basketballs were produced at a value of $21 per basketball. Meanwhile, in the first  quarter of 2023, 4600 baseballs were produced at a value of $19 per baseball, while 3200 basketballs were produced at a value of $23 per basketball.

a. Solve for the nominal and real GDP in the first quarter of 2022.
b. Solve for the nominal and real GDP in the first quarter of 2023.
c. Solve for the growth rate of real GDP between the first quarter of 2022 and the first quarter of 2023. What does this growth rate indicate or mean? In other words, what causes the real GDP value to increase?
d. Solve for the GDP price index in the first quarter of 2022 and in the first quarter of 2023.

2. Given the following information: Social Security Contributions = $1900
Government Purchases = $13100 Personal Taxes = $3200
Net Foreign Factor Income = $1600 Imports = $6300
Wages = $19200 Rent = $5300
Dividends = $2900 Transfer Payments = $1800
Interest = $9800 Corporate Profits = $6000
Personal Consumption Expenditures = $16500 Depreciation = $2100
Taxes on Production and Imports = $2700 Exports = $5600
Gross Private Domestic Investment = $6800 Proprietor's Income = $2900
Corporate Income Taxes = $1400 Statistical Discrepancy = $1300
Undistributed Corporate Profits = $1700 Population = 300

a. Using the expenditures approach, solve for aggregate expenditures, which will equal the real GDP. (10 points)
b. Solve for GDP per capita, using the GDP value solved for in part a.
c. Using the income approach, solve for national income, then net domestic product, and then GDP. The GDP value in this part will not equal the GDP value from part a, so make sure to solve first for NI, then NDP and then GDP.
d. Solve for personal income and disposable income.

3. State whether each item below would be included or excluded from the measure of GDP and explain why. (12 points - 3 points for each part. 2 points for the answer and 1 point for the explanation)
a. Income received in the form of credit card payment by a landscaping company for plowing someone else's driveway.
b. A person who plows his/her own driveway.
c. The purchase of 100 shares of corporate stock.
d. A $4 billion increase in business inventories.

4. The real GDP in the first quarter of 2022 was found to be $500,000 and the number of hours worked was 5,000. In the first quarter of 2023, the real GDP increased to $720,000 while the number of hours worked increased to 6,000. Given these values, solve for labor productivity in both quarters and solve for the growth rate of labor productivity between the two quarters.