1. Identify whether the following items are officially included in 2019 GDP or Not. Give specific reasons if they are not included in GDP. a. You purchased a home in 2019 that was built in 2015. b. Firestone sells $2 million worth of tires to General Motors. c. John makes chain-link belts and necklaces and sells them at a local flea market for cash to avoid paying taxes. d. The value of treasury notes sold by federal government in 2019. e. The profit earned in 2019 from selling a stock that you purchased in 2010. f. The value of a motor that is used in the production of a lawn mower in 2019. g. The value of a motorcycle produced in the United States in 2019 and exported to Japan. h. The value of a laser printer manufactured in 2019 but not sold in 2019. 2. Define Gross Domestic Product and Gross National Product (GNP). Explain the difference between Gross Domestic Product and Gross National Product. 3. Identify whether the following items are officially included in United States GDP or GNP. a. The wage of a Mexican citizen who works in a farm in Texas in United States. b. The profit earned by a Brazilian Citizen who works in New York stock exchange in NewYork.

2 c. The income earned by an American professor delivering a series of lectures in London. d. The value of Espresso coffee Star Bucks produces in France. 4. Why do we subtract import spending from total expenditures while calculating the GDP? 5. Suppose that a simple economy produces only three goods and services: sweatshirts, dental examinations, coffee drinks. Using the information in the table below, calculate the nominal GDP for this simple economy Product Quantity Price Sweatshirts 50 $35.00 Dental examinations 40 75.00 Coffee drinks 1,000 4.00 6. Refer to Table below. A very simple economy produces two goods: cameras and legal services. The quantities produced and their corresponding prices for 2015 and 2019 are shown in the table. 2015 2019 Product Quantity Price Quantity Price Digital Camera 100 $10 120 $12 Legal services 50 15 45 20 Calculate the real GDP in 2019 using 2015 as a base year.

3 7. Refer to Table below. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): Calculate the the GDP deflator for 2015 and 2016 and the rate of inflation between these two years. Year Nominal GDP Real GDP 2014 $13,399 $12,976 2015 14,078 13,254 2016 14,441 13,312 8. The GDP deflator in year 2 is 110 and the GDP deflator in year 3 is 118. Calculate the rate of inflation between years 2 and 3. 9. Refer to Table below. Given the following information, calculate the rate of increase in the price level from 2015 to 2016. Calculate the GDP deflator for 2015and 2016 and find the rate of inflation using the percent change formula. 2015 2016 Nominal GDP $10,000 $15,000 Real GDP 9,500 10,500 10. List five limitations of GDP as a measurement of social welfare.