Need help understanding and answering these questions. Thanks 8. Which of the fo

Question

Need help understanding and answering these questions. Thanks

8. Which of the following is included in the consumption component of U.S. GDP? (a) purchases of staplers, paper clips, and pens by U.S. business firms (b) purchases of natural gas by U.S. households (c) purchases of newly constructed homes by U.S. households (d) All of the above are correct. 9. Net exports equal (a) exports plus imports. (b) imports minus exports (c) Y - (C+I G) (d) Y - (C- I- G) 10. In the economy of Talikastan in 2015, consumption was 75% of GDP, government purchases were $200. imports were $50 and 125% of the value of exports, investment was one-sixth of the value of consumption. What was Talikastans GDP in 2015? (a) $218 (b) $2500 (c) $1520 (d) $2100

Explanation / Answer

1) Solution: purchase of natural gas by U.S. households

Explanation: . Personal consumption expenditures is inclusive of household purchases of durable and nondurable goods, and services

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2) Solution: Net exports equals Y - (C+I+G)

Explanation: GDP = C + I+G+(X-M) where net exports equals exports minus imports. Consumption

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3) Solution: 1520

Working:

Imports = $50 = 125% of exports; Exports = 40; Net exports = -10

GDP = C + I+G+NX

GDP = 75%GDP + 1/6 (75%GDP ) + 200 -10

( 1 - 0.75 - 0.125) GDP = 190

0.125 GDP = 190

GDP = 1520

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