- The Smith family of Tempe, AZ buys a new Volvo station wagon made in Sweden.
How would this be recorded in the U.S. national income and product accounts?
- Consumption would increase, imports would increase, and GDP would be unaffected.
- Consumption would be unaffected, imports would increase, and GDP would decrease.
- Consumption would increase, imports would increase, and GDP would be increase.
- Which of the following would be included in the category “Gross Domestic
Investment” (I) of the U.S. national income and product accounts? There may be
more than one correct answer.
- tractors made by Caterpillar in Illinois and sold in the U.S.
- tractors made by Caterpillar in Illinois and sold in Europe.
- tractors made by Komatsu in Japan and sold in the U.S.
- Which of the following would not be an example of U.S. capital outflow?
- Intel builds a new fabrication plant in Vietnam.
- Boeing sells a commercial aircraft to the government of China.
- Bank of America makes loans to businesses in Brazil.
- My father buys bonds issued by the government of Italy.
- Balance of payments data for a country show that there is greater capital inflow than
capital outflow, indicating that the net external wealth position of the country is
declining. Which of the following are necessarily implied by this information? There
may be more than one correct answer.
- C+I+G > GDP
- S < I
- X < M
- CA < 0
- By the year 2020, Japan is expected to receive more in income from overseas
investments than she pays in income to foreigners who own assets in Japan in an
amount equal to 2.0 percent of Japan’s GDP. Also, because of a drop in saving
associated with an aging population, Japan’s capital outflow in 2020 is expected to
exceed capital inflow but only by 0.5 percent of her GDP. Given this forecast, we
can expect the Japan’s balance of trade (exports minus imports) in 2020 to be
_____% of GDP.
- Shown below are selected macroeconomic variables for a given country. Use the
values given for the first four variables to determine the missing values for the
last four variables.
Gross domestic product (GDP) = 10,000
Gross national income (GNI) = 8,400
Current account balance (CA) = -500
Domestic investment (I) = 2,400
Balance of trade (X-M) =
National saving (S) =
Gross national expenditure (GNE) =
Net capital outflow (KO-KI) =
- Airbus (a European consortium) operates a plant in Alabama. To make a commercial
aircraft, the plant purchases engines from a factory in Germany and instruments and
assorted parts from aerospace companies in California. The Alabama plant
manufactures the frame and assembles the aircraft. A typical Airbus plane which
costs $30 mill contains $10 mill worth of engines, $8 mill worth of instruments and
other parts. The value added by the Alabama plant makes up the remaining $12 mill.
How would U.S. GDP and its components be affected by the production of an Airbus
plane in Alabama?
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