Researching Macroeconomics
Complete each of the following economic problems.
Problem A
Use the national income data in the table below to compute the following:
1. GDP.
2. NDP.
3. NI.
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National Income Data
|
|
National Income Accounting Data
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Amount (Billions)
|
|
Compensation of employees
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$288.2
|
|
U.S. exports of goods and services
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63.4
|
|
Consumption of fixed capital
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23.6
|
|
Government purchases
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188.8
|
|
Taxes on production and imports
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28.8
|
|
Net private domestic investment
|
104.2
|
|
Transfer payments
|
27.8
|
|
U.S. imports of goods and services
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33.0
|
|
Personal taxes
|
81
|
|
Net foreign factor income
|
4.4
|
|
Personal consumption expenditures
|
438.2
|
|
Statistical discrepancy
|
0
|
Problem B
Compare a $30,000 income in 1975 to that in 2015, and analyze the following questions:
1. How is the availability of products expected to change over the years?
2. How is the quality of products likely to change over the years?
3. How would your standard of living change over the years?
4. Given a choice, would you choose to live in 1975? Why or Why not?
Problem C
• In the aggregate demand model in equilibrium, GDP (Y) = C + I + X (open economy).
• Where C = consumption schedule = 100 + .75Y (consumption is a function of income).
• Where I = planned investment = 20 and X = net exports = 40. Both are independent of GDP (Y).
Use the information provided above to complete the following:
1. Calculate the equilibrium level of income or real GDP for this economy.
2. What happens to equilibrium Y if Ig changes to 15?
3. What does this outcome reveal about the size of the multiplier?
4. Can there be equilibrium level of output at below full employment?
Problem D
Answer the following questions regarding public and private goods:
1. What is the difference between a public good and a private good? What are the principal characteristics of each?
2. What are the two characteristics of public goods? Why is there a free rider problem when it comes to public goods?
3. Do you consider your local police force a public good or a private good? Why?
4. How about your local cable TV service? Explain your answer.
Internet Resources
• United States Census Bureau. (n.d.). Current population survey annual social and economic supplement (CPS ASEC). Retrieved from https://www.census.gov/hhes/www/poverty/publicatio...
• United States Census Bureau. (n.d.). Income data. Retrieved from http://www.census.gov/hhes/www/income/
• Russell Sage Foundation. (n.d.). Chartbook of social inequality. Retrieved from http://www.russellsage.org/sites/all/files/chartbo...
• Beggs, J. (n.d.). The production possibilities frontier. Retrieved from http://economics.about.com/od/production-possibili...
• Beggs, J. (n.d.). Supply and demand equilibrium. Retrieved from http://economics.about.com/od/market-equilibrium/s...
• McAfee, P. R. (2006). Introduction to economic analysis. Retrieved from http://www.mcafee.cc/Introecon/IEA.pd