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A large part of the agricultural sector in developing countries is subsistence farming, in which much of the food that is produced is consumed by the farmer and the farmer's family. Discuss the implications of this fact for the measurement of GDP in poor countries. According to the U.S. Census Bureau, nominal income for the typical family of four in the United States (median income) was $23,618 in 1985, $34,076 in 1995, $46,326 in 2005, and $49,276 in 2010.
In purchasing power terms, how did family income compare in each of those four years? You will need to know that the CPI (multiplied by 100, 1982-1984 5 100) was 107.6 in 1985, 152.4 in 1995, 195.3 in 2005, and 218.1 in 2010.
In general terms, how would your answer be affected if the Boskin Commission's conclusions about the CPI were confirmed?
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Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.
How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.
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