ECONOMICS 104 PRINCIPLES OF MACROECONOMICS Homework No.2 - Due: sunday, 10th Q1: GDP Basics (4P) Which of the foilowing transactions are included in the current GDP, i.e. this year? A simple Yes or No is enough, but please indicate for each question explicitly whether the transaction is included or not. a) b) C) d) e) f) g) hl You buy a new Toyota, made in the United States, paying $25,000. You buy a new Toyota, imported from Japan, paying $25,000. You buy a used Cadillac, paying $12,000. Google spends $500 million to increase its Internet capacity. Your grandmother receives a Social Security check for $1,500. Chrysler manufactures 1,000 automobiles at a cost of $15,000 each. Unable to sell them, the company holds the cars as inventories. Mr. Black and Mr. Blue, each out for a Sunday drive, have a collision in which their cars are destroyed. Black and Blue each hire a lawyer to sue the other, paying the lawyers $5,000 each for services rendered. The judge throws the case out of court. You sell a used computer to your friend for $100 92: Nominal GDP (NGDP) vs. Real GDP I (RGDP) (8P) Imagine a commune economy consisting of Vegans who grow and consume only the following five vegetables. Based on the information provided, answer the following questions. Item Price (2020) Quantity (2020) Price (2021) Quantity (2021) Asparagus 2 500 4 300 Broccoli 1,400 Carrot 1,150 Eggplant 350 Fennel 150 *FYI: There's not many (commonly) known veggies starting with a "D\". Crazy. ** The Base Year is 2020 a) bi Cl dl Compute NGDP for 2020 and 2021. Compute RGDP for 2020 and 2021. What does a comparison between NGDP and RGDP as of 2021 suggest about the price level? Did prices, on average, increase or decrease between 2020 and 2021? Similarly, did this economy produce more or less goods in 2021 compared to 2020? Based on the direction of prices and quantities from 2020 to 2021, do you think the changes in the economy can be explained by a Demand Shock or a Supply Shock