Question

The following data were recently obtained from the BEA; values are in billions of dollars: Personal consumption expenditures, new goods: $3,780 Personal consumption expenditures, services: $8,667.8 Personal consumption expenditures, used goods: $570 Gross private domestic investment: $3,096.3 Exports of goods and services: $1,798.2 Imports of goods and services: $2,342.9 Government consumption expenditures and gross investment: $3,839.3 Government outlays for SNAP (food stamp) program: $85.4 a. What is the value of GDP? b. Your company has several factories and divisions located in other countries; how does the production of goods and services from those factories and divisions affect both the U.S. and the other countries' GDP? c. You are considering expanding your sales to either the country of Greater Dumpington or Lesser Dumpington, but are concerned about the local citizens' ability to afford your relatively expensive products. Both countries have the same GDP, but Greater Dumpington has twice the population size as Lesser Dumpington. In which country should you expand?

          The following data were recently obtained from the BEA; values are in billions of dollars:
Personal consumption expenditures, new goods: $3,780
Personal consumption expenditures, services: $8,667.8
Personal consumption expenditures, used goods: $570
Gross private domestic investment: $3,096.3
Exports of goods and services: $1,798.2
Imports of goods and services: $2,342.9
Government consumption expenditures and gross investment: $3,839.3
Government outlays for SNAP (food stamp) program: $85.4

a. What is the value of GDP?
b. Your company has several factories and divisions located in other countries; how does the production of goods and services from those factories and divisions affect both the U.S. and the other countries' GDP?
c. You are considering expanding your sales to either the country of Greater Dumpington or Lesser Dumpington, but are concerned about the local citizens' ability to afford your relatively expensive products. Both countries have the same GDP, but Greater Dumpington has twice the population size as Lesser Dumpington. In which country should you expand?

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Added by Mary C.

Principles of Economics

Gregory Mankiw 8th Edition

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Solved by Expert Akash M

06/11/2023

Step 1

To calculate GDP, we can use the following formula: GDP = C + I + G + (X - M) where: C = Personal consumption expenditures (new goods + services + used goods) I = Gross private domestic investment G = Government consumption expenditures and gross investment X = Show more…

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The following data were recently obtained from the BEA; values are in billions of dollars: Personal consumption expenditures, new goods: $3,780 Personal consumption expenditures, services: $8,667.8 Personal consumption expenditures, used goods: $570 Gross private domestic investment: $3,096.3 Exports of goods and services: $1,798.2 Imports of goods and services: $2,342.9 Government consumption expenditures and gross investment: $3,839.3 Government outlays for SNAP (food stamp) program: $85.4 a. What is the value of GDP? b. Your company has several factories and divisions located in other countries; how does the production of goods and services from those factories and divisions affect both the U.S. and the other countries' GDP? c. You are considering expanding your sales to either the country of Greater Dumpington or Lesser Dumpington, but are concerned about the local citizens' ability to afford your relatively expensive products. Both countries have the same GDP, but Greater Dumpington has twice the population size as Lesser Dumpington. In which country should you expand?

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Transcript

00:02 To calculate gdp, we can use the following formula gdp is equals to c plus i plus g plus x minus m where c is personal consumption expenditure which we can calculate as new goods plus services plus used goods then i is equals to gross private domestic investment g is equals to government consumption expenditures and gross investment x is equals to exports of goods and services and m is equals to imports of goods and services so first we need to find the total here we can write total personal consumption expenditure which is equals to c is equals to $3780 plus $8667 .8 and $570 so it is equals to $13017 .8 now we can plug the values into gdp formula so here consumption we find it $13107 .8 plus and i is here $3096 .3 then dollar g is here $3839 .3 and x minus 5 we have to do so here $1798 .2 $1798 .2 minus $2342 .9 so here after calculating this we get here dollar same it is and first we do subtraction so here all things are same and here come $544 .7 so after adding all these we get $19408 .7 so we can say that gdp is calculated and this is the gdp now the production of goods and services from your company factories and divisions located in other countries will affect both us and other countries gdp the production in other countries will contribute to those countries gdp as it is a part of their domestic production.

03:24 However, it will not directly contribute to the us gdp as it not a part of domestic production within the us borders.

03:33 If the goods and services produced in those factories are exported back to the us they will be counted as imports in the us gdp calculation then come to the part c since greater dumpington and lesser dumpington have the same gdp we should consider the gdp per capita to determine the citizens abt to afford your relatively expensive products and gdp per capita is equals to gdp divided by population given that greater dumpington has twice the population size as lesser dumpington then its gdp per capita will be half that of lesser dumpington...

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