PLEASE COPY THE QUESTIONS AND PASTE THEM IN YOUR RESPONSE

PART 1. Which of the following are production activities that are included in GDP? Which are not? 4 pts.

1. Mr. Clean performs the service of painting his own house instead of paying someone else to do it.
2. Mr. Clean paints houses for a living.
3. Mrs. Clean earns income from parents by taking baby photos in her digital photography studio.
4. E*TRADE charges fees to process Internet orders for stock trades.
5. Tara spends $10,000 on shares of stock via an Internet trade order and pays a
6. $10 brokerage fee.
7. Jane receives a Social Security payment.
8. Ms. David makes a $300 payment for an Internet-based course on stock trading.
9. Mr. Smithsells a used car to his neighbor.

PART 2. Explain what happens to contributions to GDP in each of the following situations. 3 pts

1. A woman who makes a living charging for investment advice on her Internet Web site marries one of her clients, to whom she now provides advice at no charge.
2. A man who had washed the windows of his own house every year decides to pay a private company to wash those windows this year.
3. A company that had been selling used firearms illegally finally gets around to obtaining an operating license and performing background checks as specified by law prior to each gun sale.

PART 3. Consider the following hypothetical data for the U.S. economy in 2020 (all amounts are in trillions of dollars). 3 pts.

Statistical Discrepancy4

Depreciation3

Exports4

Gross Private Domestic investment7

Imports6

Government Purchases6

Personal Consumption Expenditure9

Net Foreign Factor income5

1. What is the Gross Domestic Product?
2. What is the Net Domestic Product?
3. What is the National Income?

See Formula:

FORMULA: EXPENDITURE APPROACH = GDP = C+ Ig + G + Xn

Add: Personal Consumption expenditure (C)+ Gross Private domestic investment (Ig) +Government purchases(G) +Net Exports (Xn) (Net Exports = Exports minus Imports) If Net exports are negative minus.

GDP - Depreciation = Net Domestic Product (NDP)

NDP- Statistical Discrepancy + Net Foreign Factor income= National Income (NI)