8/3/2019 Macro ICA Ch05 Part1

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Name _______________________________________________ MacroeconomicsDr. Sauer

Measuring the Economy: ch 5 (part 1)

1. In 2011, the US spent about $2.7 trillion on imports. Many people use this as evidence that the US istoo reliant on foreign goods. To get a more accurate picture, we should look at not only spending onimports but also spending on domestic goods and services and then compare them to GDP. Refer toTable 1.1.5 from lecture to answer the following.

a. To find spending on domestically produced goods and services, take the total spending onconsumption and then subtract spending on imports.

b. Now calculate the share of GDP that domestic spending accounts for.

c. How do your answer from b compare to the import share of GDP that we calculated duringlecture? Comment on how reliant the US is on foreign goods and services.

2. Suppose that Wisconsin produces cheese and fish. In 2002, 20 units of cheese are produced worth $5each, and 8 units of fish are produced worth $50 each. In 2001, the base year, the price of cheese was$10 per unit, and the price of fish was $75 per unit.

a. Do you have enough information to calculate Real and Nominal GDP for 2001? If so, calculatethem.

b. Do you have enough information to calculate Real and Nominal GDP for 2002? If so, calculatethem.

8/3/2019 Macro ICA Ch05 Part1

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3. The following tables depict a recent decade of GDP data for the US.

US Real GDP (in billions)

US Nominal GDP (in billions)

On the axis below, plot both Nominal and Real GDP.

GDP in trillions

15

14

13

12

11

10

2000 2001 2002 2004 2005 2006 2007 2008 2009 Year

Describe the graph you drew.

What is important about the year 2005?