UNIT 5.: DEVELOPMENT

THE GROSS DOMESTIC PRODUCT (GDP) and GDP per capita

A criterion: Knowledge and understanding

EXERCISE 1.: PROBLEMS

 A. The GDP of Spain in 2013 was 1358.26 billion of dollars. Spanish population in the given year was 46.704.314 habitants. Calculate the GDP per capita (value: 0,8 points)

B. Juan plants orange trees; after picking the oranges, he sells one box of them to Catalina (it costs 20 $) and exports 2 more at the same price. Catalina uses these oranges to make 30 glasses of orange juice, and sells them in a little market to different consumers (each one costs 1 $). In this simple form of economy (value: 0,8 points)

-   What is the GDP?

-   Who is/are the final user/s?

-   Is there any intermediate user in this form of economy?

EXERCISE 2.: TEST

Choose the one alternative that best completes the statement or answers the question.

(Value of each statement: 0,8 points)

Deducting the total value of each statement per error.

1) Intermediate goods are excluded from GDP because

a. They represent goods that have never been purchased so they cannot be counted.

b. Their inclusion would involve double counting.

c. The premise of the question is incorrect because intermediate goods are directly included in calculating GDP.

2) Gross domestic product is a measure of the total value of all

a. Consumer income in an economy over a period of time.

b. Sales in an economy over a period of time.

c. Final goods and services produced in an economy over a period of time.

3) If Nike, an American corporation, produces sneakers in Thailand this would

a. Add to neither U.S. GDP nor Thailand's GDP.

b. Add to Thailand's GDP but not to U.S. GDP

c. Count for both Thailand's GDP and U.S. GDP

4) Which of the following is NOT a final good?

a. The raw material (silk for example) used in madding a shirt up

b. A new computer sold to a student

c. A hot dog sold to a spectator at a Chicago Bears football game

5) Between 2007 and 2008, if an economy's exports rise by $8 billion and its imports fall by $8 billion, by how much will GDP change between the two years, all else equal?

a. The change in net exports will increase GDP by $8 billion.

b. The increase in exports is offset by the decrease in imports, so there is no change in net exports and no effect on GDP.

c. The change in net exports will decrease GDP by $8 billion.

6) In years with inflation, nominal GDP _____________ real GDP

a. Increases

b. Decreases

c. Sometimes increases, sometimes decreases, it depends on the products.

7) Consider the table of production and price statistics for a small economy in 2015. If the economy only produces the four goods listed below, what is GDP for 2008?

a. $428,000

b. $24,000

c. $267,000

d. $1,424

8)  If nominal GDP rises we can say that

a. Production has fallen and prices have risen.

b. Production has risen and prices remain constant.

c. Production has risen or prices have risen or both have risen.