Question
1. Discuss and explain the impact of the following transactions on the calculation of gross domestic product in an economy. a. An employee buys processed
1. Discuss and explain the impact of the following transactions on the calculation of gross domestic product in an economy.
a. An employee buys processed food products from a supermarket in the current year.
b. A foreign food manufacturing company constructs a new building, and buys new capital goods and software for a newly formed local subsidiary in the current year.
c. The foreign company in letter b issues new common shares to shareholders to raise equity in the current year.
d. The local subsidiary in letter b buys raw materials from its parent company abroad for the production of processed food in the current year.
e. The final food products of the local subsidiary in letter b are stored in a warehouse in the current year.
2. Discuss the impact of contractionary fiscal policy by the government on the aggregate demand curve, equilibrium real GDP, and equilibrium aggregate price level P. Provide a graph to support your answer.
3. Discuss the impact of an expansionary monetary policy by the central bank on the aggregate demand curve, equilibrium real GDP, and equilibrium aggregate price level . Provide a graph to support your answer.
4. Discuss the impact of a contractionary monetary policy by the central bank on the aggregate demand curve, equilibrium real GDP, and equilibrium aggregate price level P. Provide a graph to support your answer.
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