answer question 2 and 3 2 Use the information given on Table

answer question 2 and 3

2. Use the information given on Table 1 to answer the following questions: Table 1: U.S. 2011-2012 Expenditures (S billions 20112012 10,729 11,120 3,6253,783 7,1047,337 1,8552,062 1,8182,004 58 560 2,0942,184 2,6622,744 3,0603,063 1,2221,214 1,8381,849 Personal consumption expenditures Goods Services Gross private domestic investment Fixed investment Change in private inventories 37 568 Net exports of goods and services Exports Imports overnment expenditures Federal State and local Calculate GDP in 2011 and 2012 3. Which of the following counts toward changes in the current GDP? Explain each of them briefly. a. Increase in crime level b. Building new jails c. You find $10 on the sidewalk d. You fix your own Sink

Solution

2. GDP= Personal consumption expenditures + Gross private domestic investment +Government expenditures + Net export of goods and services

Therefore in 2011 GDP= 10729+1855+3060-568=$15076 billions

In 2012 GDP= 11120+2062+3063-560=$15685 billions

3. Current GDP will be changed by building new jails, as this is added to the government expenditure. GDP will be increased as government expenditure is increased.

Increase in crime level, finding $10 on the sidewalk, fixing own sink do not affect consumption, investment, government expenditure and net export so GDP will not be changed.