Exam 5: Measuring a Nations Income

Ryan is a Canadian resident who lives with his family in Victoria, Canada, but works for a small donut cafe in Seattle, U.S., where he commutes every day. On a typical day, Ryan produces 400 donuts that sell for $1 apiece. Of the revenue from selling the donuts, Ryan is paid $200 per day. The remaining $200 revenue is distributed as follows: $50 pays for inputs such as water, flour, sugar, butter, and energy, $100 is rent for using the facilities and interest for an initial loan to start the business, and $50 goes to salary to the manager and profit to the owner of the café. a) How much is the increase in U.S. GDP generated by the production of the 400 donuts? b) How much is the increase in Canada's GDP generated by the production of the 400 donuts? c) How much is Ryan's contribution to the creation of the $400 value of donuts? Explain your answer. d) Since Ryan takes his income home to Canada, should the U.S. allow foreign workers such as Ryan to take jobs that might otherwise go to American workers?

In Canada in 2018, what was the approximate amount of consumption per person?

Suppose an economy produces only strawberries and ice cream. Last year, 50 units of strawberries are sold at $2 per unit, and 100 units of ice cream are sold at $4 per unit. If the price of strawberries was $1 per unit and the price of ice cream was $2 per unit in the base year, what can we conclude?

Which example would affect GDP, as measured by Statistics Canada?

A wind farm in Manitoba buys a large turbine generator from a Swedish-owned factory located in Ontario and using local workers. What happens as a result?

Which of the following defines recessions?

A country reported a nominal GDP of $100 billion in 2020 and $75 billion in 2019 and reported a GDP deflator of 125 in 2020 and 120 in 2019. What happened to real output and prices from 2019 to 2020?

According to research done by Lars Osberg and Andrew Sharpe of the Centre for the Study of Living Standards, which Canadian province had the highest economic well-being in 2014?

After the terrorist attacks on September 11, 2001, governments raised expenditures to increase security at airports. How are these purchases of goods and services treated in GDP?

What would happen to GDP if the amount of pollution increased, ceteris paribus?

Larissa buys and lives in a newly constructed home she paid $400,000 for in 2019. She sells the house in 2020 for $450,000. How is GDP impacted?

Why does expenditure equal income?

A company makes 4,000 solar panels in the second quarter. It sells 3,000 of them before the end of the second quarter, and holds the others in its warehouse. How is the second quarter GDP affected?

How is gasoline treated in GDP terms?

Anna, a Canadian citizen who works in France for a Swiss firm, receives her pay in a German bank. To which country's GDP does Anna's employment contribute?

A flour mill produces $1000 worth of flour, of which $700 goes to a bakery and $300 to consumers. A water supplier produces $300 worth of water, of which $200 goes to the bakery and $100 to consumers. The bakery produces $1500 worth of bread and sells all of it to consumers. The three companies pay wages as follows: the mill pays $400, the water supplier pays $200, and the bakery pays $200. There are no other costs of production. a. Calculate GDP based on the value of production. b. Calculate profits to the owners of each of the three companies (profit = revenue minus costs). c. Calculate GDP based on income.

If Canada made cannabis illegal, then, other things the same, what would happen to GDP?

How are grapes treated in GDP terms?

If nominal GDP is $500 billion and real GDP is $250 billion, what is the GDP deflator?

With respect to GDP, how are transfer payments treated?