Solve all the following questions.

17. Identify and describe five critiques of GDP presented in the chapter. 18. How is the market-based welfare component of GPI estimated? 19. Identify the categories that are added in, and those that are subtracted for, when calculating the GPI. 20. What might account for the deviations of the HDI rankings from the GDP? Why might a country like Sri Lanka have a lower level of GDP per capita than Namibia, and yet have a higher HDI ranking than Namibia? 21. What are the four variables that are used to construct the Happy Planet Index? Chapter 6 - Macroeconomic Measurement: Environmental and Social Dimension 22. What have been some justifications given for the historical exclusion of household production from the national accounts? 23. Is it easier or harder to incorporate household production into the national accounts, compared to incorporating environmental assets and services? Explain. 24. What measure has been developed in recent years that subtract for the depreciation of both manufactured capital and natural capital? 25. Why has it been difficult to produce a single estimate of an environmentally adjusted or "greened" GDP? What are the two approaches that can be used to put a value on environmental assets and services? Problems 1. Suppose Country A (the Ukraine) built a nuclear power plant that had a large accident and led to the release of radioactive iodine that damaged the population's thyroids. It led to $1 million in health costs. Country B (Poland) administered potassium iodide pills to the population, to protect the population's thyroids in the case of an accident. The protection pills cost the country $100,000. Country C (Germany) decided to ban the building of nuclear power plants. What is the value of the radioactivity-free air in Country C due to this ban of nuclear power plants: a) measured in terms of the damage cost approach? b) measured in terms of the maintenance cost approach? 2. According to the results of the 2005 U.S. time use survey, women spent an average of 2.3 hours per day on household activities such as housework, food preparation, yard work, or paying bills, while men spent 1.4 hours per day (when averaged over all responses). Suppose these findings reflect the hours spent in household production for a middle class professional couple, who can each make $20 an hour in paid work. Suppose they can hire someone else to do these household activities for them for $10 an hour. Estimate the daily value of these household production activities (assuming no one else in the household is contributing to household production) using: a) the opportunity cost method b) the replacement cost method2. According to the results of the 2005 U.S. time use survey, women spent an average of 2.3 hours per day on household activities such as housework, food preparation, yard work, or paying bills, while men spent 1.4 hours per day (when averaged over all responses). Suppose these findings reflect the hours spent in household production for a middle class professional couple, who can each make $20 an hour in paid work. Suppose they can hire someone else to do these household activities for them for $10 an hour. Estimate the daily value of these household production activities (assuming no one else in the household is contributing to household production) using: a) the opportunity cost method b) the replacement cost method Chapter 6 - Macroeconomic Measurement: Environmental and Social Dimension 4 3. Counting the GPI Suppose the economists in the country Greenland have been counting the GPI and currently have estimated Personal Consumption Expenditures to be $1,000. They still need to account for the following entries. Finish the task for them, identifying whether the entries would be added or subtracted (or simply excluded) when measuring the GPI. Personal Consumption Expenditures = $1,000 Added (+) Subtracted (-) National defense $100 Spending on new bridges $25 Net foreign borrowing $75 Damage from crime $50 Volunteer work in community $50 centers Oil tanker accident $30 Loss of wetlands $20 Helping kids with homework $40 Cooking of meals at home $30 Cost of commuting $15 Services of household washing $10 machines You clean your own house $50 Working overtime on Saturdays $25 (in your paid job) Value of higher education $40 Column Totals: Total GPI:Active Review Fill in the Blank 1. The harvesting of forest products would be a component of the sector. 2. Whereas the extraction of oil would fall under the sector, the refining of petroleum would fall under the sector. 3. Utilities, such as electricity production, are a component of the sector. 4. Marketing and retailing are a component of the sector. 5. The tertiary sector is also called the sector. 6. The sector that dominates the U.S. economy, comprising about 68% of all output, is the sector. 7. While the U.S. has less than percent of the world's population, it uses about percent of the world's energy. 8. energy is the fastest-growing source of renewable energy in the United States, followed by energy. 9. Stocks, bonds, and money mutual funds are examples of assets. 10. Much of the non-monetized economic activity in the core sphere, if counted, would be part of the sector. True or False 11. The rudimentary processing of raw materials would fall under manufacturing in the secondary sector. 12. The products produced in the primary sector are generally sold to consumers in households. 13. The primary sector is no longer of great importance to the U.S. economy, given that it represents less than 3% of the U.S. private economy and employs only 1% of U.S. workers. 14. There has been evidence of adverse impacts of hydraulic fracturing on human health and the natural environment. Chapter 7 - The Structure of the United States Economy 15. The absolute number of manufacturing jobs peaked years ago in virtually all industrial countries. Short Answer 16. Briefly define the primary, secondary, and tertiary sectors. 17. How have the shares of the U.S. private economy attributed to each of the three sectors in the U.S. changed over the last few decades of the 20" century? 18. How have employment patterns in these three sectors changed since the 1960s? 19. What factor(s) explains the relative decline of the primary sector in the U.S.? 20. What are the current threats to agricultural productivity in the U.S.?1. Suppose the table below represents the simple economy of Peaceland. Industry Value Added (in millions of | Percent of GDP dollars) Agriculture 21 5.3 Transportation 34 8.5 Trade 50 12.5 Health care and social 21 5.3 assistance Education 20 5 Construction 44 11.0 Arts and Recreation 11 2.8 Diplomacy & peacekeeping 80 20 Textile manufacturing 65 16.3 Waste management and 54 13.5 environmental stewardship Economy Total 400 100% a Determine the size of the primary sector (in terms of value added and percent of GDP). b. Determine the size of the secondary (in terms of value added and percent of GDP). c. Determine the size of the tertiary sector (in terms of value added and percent of GDP). 2. Suppose the simple economy of Peaceland, above, has decided to cut out some of the activities of the "middlemen" - the people and organizations that are involved in moving products from the producer to the final consumer. They have set up Fair Trade initiatives and have established local farmers' markets, in order to encourage more of the value of the product to flow directly to the producer, rather than Chapter 7 - The Structure of the United States Economy 5 flowing into the pockets of the middlemen. Suppose the table below represents the simple economy of Peaceland after these changes. Industry Value Added (in millions of Percent of GDP dollars Agriculture 21 5.6 Transportation 25 6.7 Trade 30 8 Health care and social 21 5.6 assistance Education 24 6.4 Construction 44 11.7 Arts and Recreation 11 2.9 Diplomacy & peacekeeping 80 21.3 Textile manufacturing 65 17.3 Waste management and 54 14.4 environmental stewardship Economy Total 375 100% Determine the size of the primary, secondary, and tertiary sectors, in terms of percent of GDP. How have the respective sizes changed compared to your answer in problem 1?Active Review Fill in the Blank 1. The U.S. agency that collects data on employment and unemployment is the 2. Joe performed 15 hours of unpaid work on his family farm. He would be considered to be an person, according to the BLS. 3. Bill lost his job as an airline mechanic, and has been sending out his resume to other potential employers. He would be willing to start working in a new job immediately. Bill would be counted as an person, according to the BLS. 4. Rachael says she wants to work and is available for work. She has recently looked for work but is currently not doing so. The BLS would call Rachael a _ worker. If she gives as her reason that she is no longer looking for work because there are no jobs for her. she would be considered a_ worker. 5. The unemployment that arises due to transitions between jobs is called unemployment, whereas the unemployment that arises due to skills mismatches or geographic mismatches is called unemployment. 6. The theories developed by Keynesian-oriented economists explaining why wages may remain above equilibrium even when there's a surplus of labor are called theories. 7. People working at jobs that underutilize their abilities, as well as those who work fewer hours than they wish to, are said to be 8. Paying your workers higher than the market wage rate in order to improve productivity is an example of theory. 9. is unemployment due to macroeconomic fluctuations. sector of good jobs, or a secondary sector where workers are taken on an "as needed" basis. True or False 11. The unemployment rate is the percentage of the population that does not have paid employment, but is immediately available and actively looking for work. 12. Almost all of the people who are unemployed are so because they have involuntarily lost their jobs. 13. Structural unemployment arises because people's skills, experience, education, or Chapter 8 - Employment and Unemployment 2 location do not match what employers need. 14. The peak level of unemployment following the 1981-1982 recession was higher than the peak level of unemployment following the Great Recession of 2007-2009. 15. Jake is applying for jobs in medical research, while also working as a bartender few times a week. The BLS counts him as being underemployed. Short Answer 16. Why is high unemployment considered a bad thing? 17. Describe the two surveys the BLS uses to gather unemployment data. 18. How does the BLS classify people who are "not in the labor force." and what people are often in this category? 19. Why is it often said that the official unemployment rate tends to underestimate the true extent of unemployment in the economy? 20. What are the three major types of unemployment? Which of these three types of unemployment tends to be spread broadly throughout the entire economy, as occurs as a result of a drop-off in aggregate demand? 21. What is the classical model's explanation for involuntary unemployment