4.

4. Measuring GDP The following table shows data on consumption, investments, exports, imports, and government expenditures for the United States in 2017, as published by the Bureau of Economic Analysis. All figures are in billions of dollars. Fill in the missing cells in the table to calculate GDP using the expenditure approach. Data (Billions of dollars) Consumption (C) 13,321.4 Investment (I) 3,368.0 Exports (X) 2,350.2 Imports (M) 2,928.6 Net Exports of Goods and Services Government Purchases (G) 3,374.4 Gross Domestic Product (GDP) 5. Real versus nominal GDP Consider a simple economy that produces two goods: cupcakes and envelopes. The following table shows the prices and quantities of the goods over a three-year period. Cupcakes Envelopes Price Quantity Price Quantity Year (Dollars per cupcake) (Number of cupcakes) (Dollars per envelope) (Number of envelopes) 2016 2 115 5 175 2017 A 150 180 NN 2018 100 160 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP Year (Dollars) (Base year 2016, dollars) GDP Deflator 2016 2017 2018 From 2017 to 2018, nominal GDP , and real GDP The inflation rate in 2018 was Why is real GDP a more accurate measure of an economy's production than nominal GDP? Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not. Real GDP is not influenced by price changes, but nominal GDP is. Real GDP includes the value of exports, but nominal GDP does not.6. Limitations of GDP Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all transactions and production for that nation. Which of the following scenarios are either not accounted for or measured inaccurately by either the income or the expenditure methods of calculating GDP for the United States? Check all that apply. (3 The leisure time enjoyed by households l] The value of babysitting services, when the babysitter is paid in cash and the transaction isn't reported to the government 3 Funds spent by city governments to renovate their buildings l] The costs of overshing and other overly intensive uses of resources When a U5. company purchases and imports wood from Brazil to use to build new houses within the United States, this purchase increases the 7 component of GDP while also 7 net exports by the same amount. Therefore, the purchase of wood from Brazil causes v in US GDP