1. Suppose the economy produced 2 goods: baseballs and basketballs. In the first quarter of

2022 (the base period), 4000 baseballs were produced at a value of $17 per baseball, while

3000 basketballs were produced at a value of $21 per basketball. Meanwhile, in the first

quarter of 2023, 4600 baseballs were produced at a value of $19 per baseball, while 3200

basketballs were produced at a value of $23 per basketball. (44 points)

1. Solve for the nominal and real GDP in the first quarter of 2022. (11 points)
2. Solve for the nominal and real GDP in the first quarter of 2023. (16 points)
3. Solve for the growth rate of real GDP between the first quarter of 2022 and the first quarter of 2023. What does this growth rate indicate or mean? In other words, what causes the real GDP value to increase? (9 points)
4. Solve for the GDP price index in the first quarter of 2022 and in the first quarter of 2023. (8 points)

1. Given the following information: Social Security Contributions = $1900

Government Purchases = $13100 Personal Taxes = $3200

Net Foreign Factor Income = $1600 Imports = $6300

Wages = $19200 Rent = $5300

Dividends = $2900 Transfer Payments = $1800

Interest = $9800 Corporate Profits = $6000

Personal Consumption Expenditures = $16500 Depreciation = $2100

Taxes on Production and Imports = $2700 Exports = $5600

Gross Private Domestic Investment = $6800 Proprietor's Income = $2900

Corporate Income Taxes = $1400 Statistical Discrepancy = $1300

Undistributed Corporate Profits = $1700 Population = 300

1. Using the expenditures approach, solve for aggregate expenditures, which will equal the real GDP. (10 points)
2. Solve for GDP per capita, using the GDP value solved for in part a. (2 points)
3. Using the income approach, solve for national income, then net domestic product, and then GDP. The GDP value in this part will not equal the GDP value from part a, so make sure to solve first for NI, then NDP, and then GDP. (12 points)
4. Solve for personal income and disposable income. (8 points)

1. State whether each item below would be included or excluded from the measure of GDP and explain why. (12 points - 3 points for each part. 2 points for the answer and 1 point for the explanation)
2. Income received in the form of the credit card payment by a landscaping company for plowing someone else's driveway.
3. A person who plows his/her own driveway.
4. The purchase of 100 shares of the corporate stock.
5. A $4 billion increase in business inventories.
6. The real GDP in the first quarter of 2022 was $500,000 and the number of hours

worked was 5,000. In the first quarter of 2023, the real GDP increased to $720,000 while the

number of hours worked increased to 6,000. Given these values, solve for labor productivity

in both quarters and solve for the growth rate of labor productivity between the two quarters.

(12 points - 4 points for labor productivity in 2022, 4 points for labor productivity in 2023, 4

points for the labor productivity growth rate)