Joe builds himself a garage for his house in 2014 that is valued at $25,000. To
ID: 1095625 • Letter: J
Question
Joe builds himself a garage for his house in 2014 that is valued at $25,000. To build the garage, he purchased new materials that year for a total cost of $15,000. The change in nominal GDP is this case would be:
A. an increase of $15,000. B. an increase of $10,000. C. an increase of $25,000. D. an increase of $40,000.
Consider the following data for the year 2015:
Consumption spending $50
Wages and salaries $30
Government spending $12
Exports $8
Investment spending $14
Imports $2
Interest $12
Rents $8
Profits $32
What is the level of nominal GDP for this economy in 2015?
A. $162
B. $100
C. $164
D. $84
E. $82
A. $162
B. $100
C. $164
D. $84
E. $82
Explanation / Answer
1. C. an increase of $25,000.
GDP is the monetary value of final goods and services produced in given year. For calculation of GDP is exclude the cost of intermediate raw materials. since new product of 25000 is added to national production so GDP will increase by $25,000.
2. E
GDP=C+I+G+X-M = 82
Or Through income method:
GDP= salaries+interest+profit+rents =82
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