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a Problems and Exercises 16. INVESTMENT Given the following data, answer questions a 14. INCOME APPROACH TO GDP How does the income approach to through c. measuring GDP differ from the expenditure approach? Explain Billions of Dollars the meaning of value added and its importance in the income ap- $500 proach. Consider the following data for the selling price at each Now residential construction 250 stage in the production of a 5-pound bag of flour sold by your Purchases of existing homes local grocer. Use the value-added approach to calculate the final market value of the flour. Sales value of newly issued stocks 600 and bonds 800 Stage of Production Sale Price New physical capital 200 Farmer $0.30 Depreciation 50 Miller 0.50 Household purchases of new furniture Wholesale TOO 1.00 Nel change in firms' Inventories Grace 1.50 700 Production of new intermediate goods 15. EXPENDITURE APPROACH TO GDP Given the following annual What is the value of gross private domestic investment? information about a hypothetical country, answer questions a b. What is the value of net investment? through d. c. Are any intermediate goods counted in gross investment? 17. CONSUMER PRICE INDEX Calculate a new consumer price Billions of Dollars Personal consumption expenditures index for the data in Exhibit 5 in this chapter. Assume that $200 Personal taxes current-year prices of Twinkies, fuel oil, and cable TV are 50 $0.95/package, $1.25/gallon, and $15.00/month, respectively. Exports 30 Calculate the current year's cost of the market basket and the Depreciation 10 value of the current year's price index. What is this year's per- Government purchases 50 centage change in the price level compared to the base year? Gross private domestic investment 18. CONSUMER PRICE INDEX Given the following data, what Imports 40 was the value of the consumer price index in the base year Government transfer payments 20 Calculate the annual rate of consumer price inflation in 2012 in each of the following situations: a. What is the value of GDP? b. What is the value of net domestic product? a. The CPI equals 200 in 2011 and 240 in 2012. c. What is the value of net investment? b. The CPI equals 150 in 2011 and 175 in 2012. d. What is the value of net exports? c. The CPI equals 325 in 2011 and 340 in 2012. d. The CPI equals 325 in 2011 and 315 in 2012. 40 a Problems and Exercises 16. INVESTMENT Given the following data, answer questions a 14. INCOME APPROACH TO GDP How does the income approach to through c. measuring GDP differ from the expenditure approach? Explain Billions of Dollars the meaning of value added and its importance in the income ap- $500 proach. Consider the following data for the selling price at each Now residential construction 250 stage in the production of a 5-pound bag of flour sold by your Purchases of existing homes local grocer. Use the value-added approach to calculate the final market value of the flour. Sales value of newly issued stocks 600 and bonds 800 Stage of Production Sale Price New physical capital 200 Farmer $0.30 Depreciation 50 Miller 0.50 Household purchases of new furniture Wholesale TOO 1.00 Nel change in firms' Inventories Grace 1.50 700 Production of new intermediate goods 15. EXPENDITURE APPROACH TO GDP Given the following annual What is the value of gross private domestic investment? information about a hypothetical country, answer questions a b. What is the value of net investment? through d. c. Are any intermediate goods counted in gross investment? 17. CONSUMER PRICE INDEX Calculate a new consumer price Billions of Dollars Personal consumption expenditures index for the data in Exhibit 5 in this chapter. Assume that $200 Personal taxes current-year prices of Twinkies, fuel oil, and cable TV are 50 $0.95/package, $1.25/gallon, and $15.00/month, respectively. Exports 30 Calculate the current year's cost of the market basket and the Depreciation 10 value of the current year's price index. What is this year's per- Government purchases 50 centage change in the price level compared to the base year? Gross private domestic investment 18. CONSUMER PRICE INDEX Given the following data, what Imports 40 was the value of the consumer price index in the base year Government transfer payments 20 Calculate the annual rate of consumer price inflation in 2012 in each of the following situations: a. What is the value of GDP? b. What is the value of net domestic product? a. The CPI equals 200 in 2011 and 240 in 2012. c. What is the value of net investment? b. The CPI equals 150 in 2011 and 175 in 2012. d. What is the value of net exports? c. The CPI equals 325 in 2011 and 340 in 2012. d. The CPI equals 325 in 2011 and 315 in 2012. 40