Chapter 8: 1. Critical Thinking Question (page 164)
Why might it be difficult to measure natural resource depletion or pollution and convert the resulting quantity into a dollar-denominated amount
Depletion of natural resources or pollution are not measurable in monetary terms.
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Based on the information in Table, in what years was the economy in a recession? Explain briefly.
Which of the following activities of a computer manufacturer during the current year are included in this year's measure of GDP?
a. The manufacturer produces a chip in June, uses it as a component in a computer in August, and sells the computer to a customer in November.
b. A retail outlet of the firm sells a computer completely built during the current year.
c. A marketing arm of the company receives fee income during the current year when a buyer of one of its computers elects to use the computer manufacturer as her Internet service provider.
Why might a range of dashboard economic indicators be difficult to include in one single measure such as GDP?
Explain what happens to the official measure of GDP in each of the following situations.
a. Air quality improves significantly throughout the United States, but there are no effects on aggregate production or on market prices of final goods and services.
b. The U.S. government spends considerably less on antipollution efforts this year than it did in recent years.
c. The quality of cancer treatments increases, so patients undergo fewer treatments, which hospitals continue to provide at the same price per treatment as before.
Which of the following are production activities that are included in GDP? Which are not?
a. Mr. King performs the service of painting his own house instead of paying someone else to do it.
b. Mr. King paints houses for a living.
c. Mrs. King earns income from parents by taking baby photos in her digital photography studio.
d. Mrs. King takes photos of planets and stars as part of her astronomy hobby.
e. Trade charges fees to process Internet orders for stock trades.
f. Mr. Ho spends on shares of stock via an Internet trade order and pays a brokerage fee.
g. Mrs. Ho receives a Social Security payment.
h. Ms. Hernandez makes a payment for an Internet-based course on stock trading.
i. Mr. Langham sells a used laptop computer to his neighbor.
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