Questions 14 through 18

16. INVESTMENT Given the following data, answer questions a through c. Problems and Exercises 14. INCOME APPROACH TO GDP How does the income approach to measuring GDP differ from the expenditure approach? Explain the meaning of value added and its importance in the income ap- proach. Consider the following data for the selling price at each stage in the production of a s-pound bag of flour sold by your local grocer. Use the value-added approach to calculate the final market value of the flour. Billions of Dollars $500 250 600 800 200 Slage of Production Farmer Miller Wholesale Grocer New residential construction Purchases of existing homes Sales value of newly issued stocks and bonds New physical capital Depreciation Household purchases of new furniture Net change in firms' inventories Production of new intermediate goods Sale Price $0.30 0.50 1.00 50 100 700 1.50 15. EXPENDITURE APPROACH TO GDP Given the following annual information about a hypothetical country, answer questions a through d. Billions of Dollars $200 50 30 10 Personal consumption expenditures Personal taxes Exports Depreciation Government purchases Gross private domestic investment Imports Government transfer payments 50 a. What is the value of gross private domestic investment b. What is the value of net investment? c. Are any intermediate goods counted in gross investment? 17. Consumer PRICE INDEX Calculate a new consumer price index for the data in Exhibit 5 in this chapter. Assume that current-year prices of Twinkies, fuel oil, and cable TV are $0.95/package, $1.25/gallon, and $15.00/month, respectively , Calculate the current year's cost of the market basket and the value of the current year's price index. What is this year's per- centage change in the price level compared to the base year 18. CONSUMER PRICE INDEX Given the following data, what was the value of the consumer price index in the base year? Calculate the annual rate of consumer price inflation in 2012 in each of the following situations: a. The CPI equals 200 in 2011 and 240 in 2012. b. The CPI equals 150 in 2011 and 175 in 2012. c. The CPI equals 325 in 2011 and 340 in 2012. d. The CPI equals 325 in 2011 and 315 in 2012. 40 40 20 a. What is the value of GDP? b. What is the value of net domestic product? c. What is the value of net investment? d. What is the value of net exports? 16. INVESTMENT Given the following data, answer questions a through c. Problems and Exercises 14. INCOME APPROACH TO GDP How does the income approach to measuring GDP differ from the expenditure approach? Explain the meaning of value added and its importance in the income ap- proach. Consider the following data for the selling price at each stage in the production of a s-pound bag of flour sold by your local grocer. Use the value-added approach to calculate the final market value of the flour. Billions of Dollars $500 250 600 800 200 Slage of Production Farmer Miller Wholesale Grocer New residential construction Purchases of existing homes Sales value of newly issued stocks and bonds New physical capital Depreciation Household purchases of new furniture Net change in firms' inventories Production of new intermediate goods Sale Price $0.30 0.50 1.00 50 100 700 1.50 15. EXPENDITURE APPROACH TO GDP Given the following annual information about a hypothetical country, answer questions a through d. Billions of Dollars $200 50 30 10 Personal consumption expenditures Personal taxes Exports Depreciation Government purchases Gross private domestic investment Imports Government transfer payments 50 a. What is the value of gross private domestic investment b. What is the value of net investment? c. Are any intermediate goods counted in gross investment? 17. Consumer PRICE INDEX Calculate a new consumer price index for the data in Exhibit 5 in this chapter. Assume that current-year prices of Twinkies, fuel oil, and cable TV are $0.95/package, $1.25/gallon, and $15.00/month, respectively , Calculate the current year's cost of the market basket and the value of the current year's price index. What is this year's per- centage change in the price level compared to the base year 18. CONSUMER PRICE INDEX Given the following data, what was the value of the consumer price index in the base year? Calculate the annual rate of consumer price inflation in 2012 in each of the following situations: a. The CPI equals 200 in 2011 and 240 in 2012. b. The CPI equals 150 in 2011 and 175 in 2012. c. The CPI equals 325 in 2011 and 340 in 2012. d. The CPI equals 325 in 2011 and 315 in 2012. 40 40 20 a. What is the value of GDP? b. What is the value of net domestic product? c. What is the value of net investment? d. What is the value of net exports