Tutorial Questions: Chapter 27

1. Why do economists include only final goods and services when measuring GDP?
Why don’t they include the value of the stocks and bonds bought and sold? Why don’t
they include the value of the used furniture bought and sold?

2. Suppose GDP is $5.0 trillion, depreciation is $1 trillion, and gross output (G O) is

$17.25 trillion.
a. What is the value of all stages of production and distribution except for final sales
of goods and services?
b. What is the dollar value of economic activity taking place at every stage of
production and distribution?

3. Using the following national income accounting data, compute (a) GDP, (b) NDP,
and (c) NI. All figures are in billions.

4. Assume that the total value of the following items is $600 billion in a specific year for
Upper Mongoose: net exports = $50 billion; value of new goods and services
produced in the underground economy = $75 billion; personal consumption
expenditures = $300 billion; value of the services of stay-at-home parents = $25
billion; gross domestic investment = $100 billion; government purchases = $50
billion. What is Upper Mongoose’s GDP for the year? What is the size of the
underground economy as a percentage of GDP? By what percentage would GDP
increase if the value of the services of stay-at-home spouses were included in GDP?