1. Would it be possible for an increase in taxation to decrease the gross domestic product measured in the U.S.? Why or why not?

2. Provide the formula for the expenditure approach to GDP accounting and include an example of each category of spending.

3. Suppose a consumer buys 4 units of good X and 10 units of good Y every year. The following table lists the prices of goods X and Y in the years 2005-2007. Assume that these two goods constitute the typical market basket. Calculate the price indices for these years with 2005 as the base year. Comment on the inflation picture for these years.

Year	Good X	Good Y
2005	$3	$6
2006	4	7
2007	5	8

4. Using the expenditure approach, calculate GDP using the following data.

Item	Amount in dollars (billions)
Total Consumption	8,600
Consumption of Durable Goods	1,600
Consumption of Non Durable Goods	2,800
Consumption of Services	3,200
Total Investment	3,000
Fixed Investment	1,000
Government purchases of Goods & Services	3,675
Government Transfer Payments	450
Exports	800
Imports	1,200
GDP Equals

5. What is the importance of measuring per capita GDP?