explain how net exports might be a negative amount

explain how net exports might be a negative amount

By what percentage did the price level, as measured by this index, rise between 1984 and 2000? A decline in inventories indicates that goods produced in a previous year have been used up in this year’s production. The Census Bureau provides survey data for consumption, investment, and government purchases. All figures are in billions. 4. Census Bureau’s “Survey of Government Finance.” Net export information comes from: U.S. Customs Service data on exports and imports. Ans: c.) a country’s exports of goods and services less its imports of goods and services.

This is an increase of 14.29 percent [= ($2.4 billion $2.1 billion)/$2.1 billion)]—and not the 55 percent incorrectly derived earlier.


Why don’t they include the value of stocks and bonds sold? 5. (n) Included. If the production of oranges increases by 100 percent and that of computers by 10 percent, it does not make any sense to add the 100 percent to the 10 percent, then divide by 2 to get the average and say total production has increased by 55 percent. Thus, the price of housing increasing by 5 percent has a much greater effect on the price index used to compare prices from one year to the next, than would the price of a book of matches increasing by 100 percent. 1.

How is this problem resolved? Since the same amount of money paid out by the buyers of the economy’s output is received by the sellers as income (looking only at a private-sector economy at this point), “an economy’s output is also its income.” 24-3 (Key Question) Why do economists include only final goods in measuring GDP for a particular year?

(j) Excluded.

On the income side, nonincome charges—consumption of fixed capital (depreciation) and taxes on production and imports—are covered in detail because these usually give students the most trouble.

Compare to the simpler model presented in earlier chapters. c. Depreciation/Consumption of Fixed Capital: The firm also regards the decline of its capital stock as a cost of production. Chapter 24 - Measuring Domestic Output and National Income Chapter 24 - Measuring Domestic Output and National Income PAGE 348 PAGE 349 86 ¡ ¿ Ë Ì Ñ ğ 4 ?

used car dealers.) In the hands of business both the bricks and the beans are equally assets to the business, something in which business has invested. Since net domestic product is gross domestic product less depreciation, in determining net domestic product through the expenditures approach it would be appropriate to use the net investment measure that excludes depreciation, that is, net private domestic investment.

To calculate, take NI minus payroll taxes (social security contributions), minus corporate profits taxes, minus undistributed corporate profits, and add transfer payments. Define net exports.


Because the long-term trend has been for prices to rise, adjusting Nominal GDP to Real GDP involves inflating the lower prices before the base year and deflating the higher prices after the base year.

Why or why not? A nation's net exports may also be called its balance of trade . Money received by Josh when he resells his nearly brand-new

B. If bought by a household, it will be shown as consumption; if bought by a business, as investment—as a cost added to its real investment in physical capital. When exports are less than imports, the net exports figure is negative. YearNominal GDP, BillionsPrice index (2000 = 100)Real GDP, Billions1964 1974 1984 1994 2004 $663.6 1500.0 3933.2 7072.2 11734.3 22.13 34.73 67.66 90.26 109.10 $ ______ $ ______ $ ______ $ ______ $ ______ Values for real GDP, top to bottom of the column: $2,998.6 (inflating); $4,319.0 (inflating); $5,813.2 (inflating); $7,835.4 (inflating); $10,755.5 (deflating). So the economy ended the year with $6 billion less capital.

(e) Excluded. Government purchase data is obtained from: U.S. Office of Personnel Management, which collects data on wages and benefits. Census construction surveys of public projects.

By comparing national accounts over a number of years, we can track the long-run course of the economy. i. A monthly allowance a college student receives from home. Rents: payments for supplying property resources (adjusted for depreciation it is net rent). Suppose inventories declined by $1 billion during 2008. other for comparing changes in the standard of living over a series of years?

The questions that follow ask you to determine the major national income measures by both the expenditure and income methods.

Explain. The Last Word looks at the sources of data for the GDP accounts. Explain: “Though net investment can be positive, negative, or zero, it is quite impossible for gross investment to be less than zero.” When gross investment exceeds depreciation, net investment is positive and production capacity expands; the economy ends the year with more physical capital than it started with.

Taxes on production and imports: general sales taxes, excise taxes, business property taxes, license fees, and customs duties. U.S. exports and imports each affects domestic production because 3.

Compensation of employees U.S. exports of goods and services Consumption of fixed capital (depreciation) Government purchases Taxes on production and imports Net private domestic investment Transfer payments U.S. imports of goods and services Personal taxes Net foreign factor income Personal consumption expenditures Statistical discrepancy$194.2 17.8 11.8 59.4 14.4 52.1 13.9 16.5 40.5 2.2 219.1 0 (a) Personal consumption expenditures (C)$219.1 Government purchases (G)59.4 Gross private domestic investment (Ig)63.9 (52.1 + 11.8) Net exports (Xn) (17.8 – 16.5)1.3 Gross domestic product (GDP)$343.7(b) Consumption of fixed capital-11.8 Net domestic product (NDP)$331.9(c) Net foreign factor income earned in U.S.2.2Taxes of production and imports-14.4 National income (NI)$319.7 2410 Why do national income accountants compare the market value of the total outputs in various years rather than actual physical volumes of production?

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