Consider the following macroeconomic data for the United States in 2008:

Item Billions of dollars

Wages paid to labor 8000

Consumption expenditure 10000

Net operating surplus 3200

Investment 2000

Government expenditure 2800

Net exports -700

Depreciation 1800

(a)Explain how negative net exports could arise.

(b)Calculate US GDP in 2008

(c)Explain the approach (expenditure or income) that you used to calculate GDP

(d)Which of the following would be included in US GDP? (i) haircuts in the US (ii) sales of used textbooks in the US (iii) Ford trucks built in Canada

(e)While studying with your friend, your friend states, "Our leisure time increases GDP but lower economic welfare because it reduces the amount of goods and services that we consume." Is your friend's statement correct?

(f)Is it true that legalization of marijuana would increase GDP?

(g)Explain how underground economic activity affects measurement of GDP.

(h)Using a graph draw and label the phases and turning points of a business cycle.