1 The expenditures method of GDP calculation is the one most often used and easiest The aggregate expenditures formula (Y C I G Nx) allows economists to categorize various expenditures From the following list of purchases, please identify which category of aggregate expenditures each item would be associated with C for consumption, G for government spending, I for business investment, or NC for not counted If it is not counted, you must explain why it is not counted (secondhand transaction, etc ) (12 points) Ford Motor Company buys new auto making robots You spend $7 00 to attend a movie You buy General Motor stock for $1,000 A family pays a contractor $100,000 to build a house this year You pay $300 a month to rent an apartment RJ Reynolds Company buys control of Nabisco A homemaker works hard caring for her spouse and two children A family pays $75,000 for a home built three years ago The government increases its defense spending by $1 billion At the end of the year, a flour milling firm finds that its inventories of grain and flour are $10,000 above the amounts of its inventories at the beginning of the year An accountant pays a tailor $175 to make a new suit Apple Computer builds a new factory in the Japan 2 Why do both the income and expenditure methods of calculating GDP produce the same estimate (1 point) 3 Why do we count only the final retail price of a new good or service in GDP (1 point) 4 Why are purely financial transactions (buying of stocks, bonds, real estate, etc ) not counted in GDP (1 point) 5 The following figures are available for the economy of Econville (5 points) ons (buying of stocks, bonds, real estate, etc ) not counted in for the economy of Econville (5 points) Consumer expenditures 600 Gross investment expenditures $150 Government expenditures $200 Imports $150 Exports $50 Transfer payments $50 Depreciation $25 duct for this economy ed above is for year 1 and is comprised of 80 economics textbook is same economy produced 80 textbooks $20 each and 50 eco 1 and 2

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1. The expenditures method of GDP calculation is the one most often used and easiest. The aggregate expenditures formula (Y=C+I+G+Nx) allows economists to categorize various

1. The expenditures method of GDP calculation is the one most often used and easiest. The aggregate expenditures formula (Y=C+I+G+Nx) allows economists to categorize various expenditures.

From the following list of purchases, please identify which category of aggregate expenditures each item would be associated with - C for consumption, G for government spending, I for business investment, or NC for not counted. If it is not counted, you must explain why it is not counted (secondhand transaction, etc.) (12 points)

Ford Motor Company buys new auto-making robots.
You spend $7.00 to attend a movie
You buy General Motor stock for $1,000.
A family pays a contractor $100,000 to build a house this year
You pay $300 a month to rent an apartment.
RJ Reynolds Company buys control of Nabisco.
A homemaker works hard caring for her spouse and two children
A family pays $75,000 for a home built three years ago.
The government increases its defense spending by $1 billion.
At the end of the year, a flour-milling firm finds that its inventories of grain and flour are $10,000 above the amounts of its inventories at the beginning of the year.
An accountant pays a tailor $175 to make a new suit.
Apple Computer builds a new factory in the Japan.

2. Why do both the income and expenditure methods of calculating GDP produce the same estimate? (1 point)

3. Why do we count only the final retail price of a new good or service in GDP? (1 point)

4. Why are purely financial transactions (buying of stocks, bonds, real estate, etc.) not counted in GDP? (1 point)

5. The following figures are available for the economy of Econville. (5 points)

ons (buying of stocks, bonds, real estate, etc. ) not counted in for the economy of Econville. (5 points) Consumer expenditures 600 Gross investment expenditures | $150 Government expenditures $200 Imports $150 Exports $50 Transfer payments $50 Depreciation $25 duct for this economy. ed above is for year 1 and is comprised of 80 economics textbook is same economy produced 80 textbooks @ $20 each and 50 eco 1 and 2