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Part I:
Assume that Country A has a population of 500,000 and only produces 1 good: cars. Country A produces 100,000 cars per year. The people in Country A purchase 90,000 cars, but there are not enough cars to fulfill all the demand. They decide to import 50,000 more. The government buys 25,000 cars for its police force, and 10,000 cars are bought by companies to transport employees to other locations to work. They also export 65,000 cars to nearby countries for sale. Discuss the following:
• What is Country A's GDP?• What is the composition of GDP by percentage?• What is the GDP per capita?• How does this relate to Keynesian economics?
Part II
The Bureau of Economic Analysis at this Web site, and look up the latest new release for real GDP. Address the following questions after reading the latest release:
• Where is the United States in the business cycle?• What is the real GDP today?• What is the largest component of GDP?• What is the smallest component of GDP?• What is the fastest growing component of GDP, and why?• What components of GDP were involved in the change from last month to this month?• What is the price index today?• What caused the change?
Illustrtae the possibly changes which the "accrual" accounting or the "cash basis" could bring into the financial statements.
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Please evaluate the effect of the following scenario on the AD curve, AS curve, and accordingly the effect on equilibrium price level and equilibrium GDP/output.
Robin and Terry are Stranded on a deserted island and consume two products, coconuts and fish. In a day, Robin can catch 2 fishes or gather 8 coconuts, and Terry can catch 1 fish or gather 1 coconut.
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1a. i if there was no item in the economy widely accepted in return for goods and services how would transactions be
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