{"id":47860,"date":"2022-04-02T05:30:38","date_gmt":"2022-04-02T05:30:38","guid":{"rendered":"https:\/\/assignmenttutors.net\/blog\/mt445-unit-7-assignment-managerial-economics\/"},"modified":"2022-04-02T05:30:38","modified_gmt":"2022-04-02T05:30:38","slug":"mt445-unit-7-assignment-managerial-economics","status":"publish","type":"post","link":"https:\/\/assignmenttutors.net\/blog\/mt445-unit-7-assignment-managerial-economics\/","title":{"rendered":"Mt445 unit 7 assignment managerial economics"},"content":{"rendered":"
\n

Please answer the following questions. Submit as a Microsoft Word\u00ae document to the Dropbox<\/span>
when completed.<\/span>
Why does inflation make nominal GDP a poor measure of the increase in total production?<\/span>
Nominal GDP is \u201cthe value of final goods and services evaluated at current-year prices\u201d and is<\/span>
\u201ccalculated by summing the current values of final goods and services\u201d, whereas \u201creal GDP is<\/span>
calculated by designating a particular year as the base year and then using the prices of goods<\/span>
and services in the base year to calculate the value of goods and services in all other years<\/span>
(Hubbard & O\u2019Brien, 2009). Nominal GDP is GDP without adjustments of inflation which makes it<\/span>
seem like there is growth even when there is no growth. During inflation it is difficult to estimate<\/span>
how much increase in nominal GDP has been due to increase in total production and how much<\/span>
increase has been due to inflation.<\/span>
Which component of GDP will be affected by each of the following transactions involving<\/span>
FlyCheap Airlines? If you do not believe any component will be affected, briefly explain why.<\/span>
GDP = C+I+G+(X-M)<\/span>
C = Consumption expenditure<\/span>
I = Investment expenditure<\/span>
G = Government expenditure<\/span>
X = Export<\/span>
M = Import<\/span>
i. You purchase a ticket on a FlyCheap Airlines to visit your niece.<\/span>
This would be consumption expenditure and would affect GDP. (C)<\/span>
ii. FlyCheap Airlines purchases a new jetliner from Boeing.<\/span>
This would be investment expenditure and would affect GDP. (I)<\/span>
iii. FlyCheap Airlines purchases new seats to be installed on a jetliner it already owns.<\/span>
This would be investment expenditure and would affect GDP. (I)<\/span>
iv. FlyCheap Airlines purchases 200 million gallons of fuel.<\/span>
Expenditure of fuel is an intermediate payment and is not part of GDP.<\/span><\/p>\n

[MT445 | Managerial Economics]<\/span>
v. A French citizen purchases a ticket to fly on a FlyCheap flight from Paris to New York.<\/span>
This would be part of Export and will not affect GDP. (E)<\/span>
vi. The city of Nashville agrees to spend funds to extend one of the runways so that<\/span>
FlyCheap will be able to land larger jets.<\/span>
This would be a government expenditure and would be included in GDP. (G)<\/span>
Use the table to answer the following questions.<\/span>
Year<\/span><\/p>\n

Real GDP (Billions of 2000 Dollars)<\/span><\/p>\n

1993<\/span><\/p>\n

$7,113<\/span><\/p>\n

1994<\/span><\/p>\n

7,101<\/span><\/p>\n

1995<\/span><\/p>\n

7,337<\/span><\/p>\n

1996<\/span><\/p>\n

7,533<\/span><\/p>\n

1997<\/span><\/p>\n

7,836<\/span><\/p>\n

i. Calculate the growth rate of real GDP for each year from 1994 to 1997.<\/span>
1994 is (12)\/7113= (.0017)x100= (.17)%<\/span>
1995 is 236\/7101=.03×100= 3.32%<\/span>
1996 is 196\/7337=.026×100= 2.67%<\/span>
1997 is 303\/7533=.04×100= 4.02%<\/span>
ii. Calculate the average annual growth rate of real GDP for the period from 1994 to<\/span>
1997.<\/span>
Average growth rate of real GDP is (.17) + 3.32 +2.67 +4.02 = 2.46%<\/span>
iii. How does the average annual growth rate you calculated in (ii) above compare to<\/span>
the average growth rate the U.S. normally expects?<\/span>
The average annual growth rate of 2.46% that I calculated above is much lower than what<\/span>
is expected normally in the U.S.<\/span><\/p>\n

In an open economy, trade is allowed between countries. Assume a consumer purchases<\/span>
$1,000 worth of furniture manufactured in China. Answer the following:<\/span><\/p>\n

[MT445 | Managerial Economics]<\/span>
a. Which component(s) of GDP are impacted by this purchase?<\/span>
GDP = C+I+G+X+M<\/span>
C = Consumption expenditure<\/span>
I = Investment expenditure<\/span>
G = Government expenditure<\/span>
X = Export<\/span>
M = Import<\/span>
This would impact consumption expenditures from and net exports.<\/span>
b. Does GDP increase, decrease or stay the same? Briefly explain why.<\/span>
c. Does your answer change if the company in China is a U.S.-owned company? Why or<\/span>
why not?<\/span><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Please answer the following questions. Submit as a Microsoft Word\u00ae document to the Dropboxwhen completed.Why does inflation make nominal GDP a poor measure of the increase in total production?Nominal GDP is \u201cthe value of final goods and services evaluated at current-year prices\u201d and is\u201ccalculated by summing the current values of final goods and services\u201d, whereas […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[],"class_list":["post-47860","post","type-post","status-publish","format-standard","hentry","category-education"],"_links":{"self":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/47860","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/comments?post=47860"}],"version-history":[{"count":0,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/47860\/revisions"}],"wp:attachment":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/media?parent=47860"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/categories?post=47860"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/tags?post=47860"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}