Question

Which would increase U.S. GDP?

Group of answer choices

An increase in charitable contributions by U.S. citizens

A garage sale with all used items

An increase in prices in the foreign market

None of the above

The average annual income for a female in Wisconsin is $38,000, while for a male it is $45,000. If prices rise by 2% next year and salaries of both females and males rise by 2% we can expect

Group of answer choices

No change in nominal income while real income rose

No change in nominal income and no change in real income

Nominal income rose and no change in real income

Nominal income rose while real income fell

The amount of unemployment that is normal or unavoidable is due to

Group of answer choices

The mismatching of candidates to a job and the time lags involved in labor market adjustments

The voluntary idleness of those who choose not to seek employment

The ups and downs in the level of economic activity in the economy and the time lags involved in labor market adjustments

The impact of foreign competition on our domestic job conditions and the lack of demand for domestic goods and services

Answer 1

At the time of calculation of GDP newly produced goods, final goods are included and sale and purchase of financial assets are not part of GDP.

The GDP can be defined the market value of all goods and services which are produced in the domestic territory of the country in the current financial years. GDP by Expenditure method

GDP=C+I+G+(X-M)

Transfer income is not included in the GDP.

With an increase in prices in the foreign market, the demand for US goods and services will increases, so export increases, which leads to an increase in the US GDP.

Hence option third is the correct answer.

2.

As it has been given that the average annual income for a female in Wisconsin is $38,000, while for a male it is $45,000. If prices rise by 2% next year and salaries of both females and males rise by 2% we can expect

Nominal income of female=38000+0.02*38000

=38000+760

=$38,760

Nominal income of male=45000+0.02*45000

=45000+900

=$45,900

Since real income decreases when price level increase, so it can be said that it can be expected Nominal income rose while real income fell.

Hence option fourth is the correct answer.

3.

Since natural level of unemployment is that unemployment at which there is some frictional and structural unemployment exist, this is short-term temporary unemployment and it may vanish in near future.

The structural unemployment exists when there is a shifts in the economy which creates a mismatch between the skills workers have and the skills needed by employers.

Since frictional unemployment arise when people change one job for getting another and in this way they remain unemployed for some time. The natural level of unemployment means an unemployment rate which does not vanish even in the long-run and it persists and it is positive..

The amount of unemployment that is normal or unavoidable is due to the mismatching of candidates to a job and the time lags involved in labor market adjustments. This is because it is short-time unemployment and it is necessary for the economy.

Hence option first is the correct answer.