Unit 7 Assignment: Exchange Rate Regimes

use what you learned in the team discussion to evaluate the various components of the gross domestic product (GDP) and factors that affect the GDP components. You will also compute the growth rate of U.S. real GDP and compare the average with the expected growth rate of U.S. real GDP.

Instructions:This assignment presents scenarios in which you will examine the impacts of net exports on the U.S. economy by evaluating the components of the GDP. It requires a combination of short paragraph answers, computations, and completionRead the Criteria section below for more information before you begin this assignment.

Questions

1. In your team discussion, you examined foreign GDP. Give a brief explanation describing how the team discussion helped you research and explore domestic GDP for this assignment.
2. Why does inflation make nominal GDP a poor measure of the increase in total production?
3. Which component of GDP will be affected by each of the following transactions involving "American Cars R Us Rental"? Briefly explain. Hint on the components of the GDP: GDP = C + I + G + Nx
   1. You use American Cars R Us Rental on your next vacation.
   2. American Cars R Us Rental purchases auto parts from foreign companies.
   3. American Cars R Us Rental spends $50,000,000 to update their inventory, marketing, and technology.
   4. American Cars R Us Rental purchases 5,000 American automobiles from their competitors.
   5. The federal government decides to subsidize any "fuel-efficient" experiments with the cars that American Cars R Us Rental decides to purchase.