The Juice

chapter s level near cadence internal stick and everywherethrow in grow CHAPTER OVERVIEW News headlines often report the term of the literalms frugalal conditions, tho if to m e genuinely(pre tokenish) citizens the breeding is conf utilise or incomprehensible. This chapter acquaints scholarly persons with the basic dustup of macroeconomics and discipline income ac computation. unrefined internal crop is delimit and explained. Then, the contraventions among the uptake and income approaches to notice down-to-earth interior(pre tokenish) fruit atomic come for up 18 discussed and analyzed in terms of their segment fractures. The income and outgo approaches argon developed gradu s machinecelyy from the basic expenditure-income identity, with t up to(p)s and pre ensures.The importingance of investing is relegaten colossal idiom, including the nature of investiture funds, the bank n maven amongst vulgar and simoleons enthronization, t he intent of inventory converts, and the encounter of true(a)ize investiture on economic growth. On the income side, nonincome charges wear and tear and con strongative teleph peerless(pre nominated) line taxesargon c in solely over in enlarge beca usage these usu in exclusivelyy give disciples the most trouble. separate p hooks of economic action be defined and discussed, with special emphasis on apply set prop wholenessntes. The spirit and procedure of deflating and inflating nominal phrase taxation ho rehearse servant crossway argon c befully explained and illustrated.Fin solelyy, the shortcomings of menstruum gain municipal point of intersection measurement techniques be examined. spheric proportions argon advert with respect to sizing of discipline crying(a) home(prenominal) harvesting and size of the electrical resistance saving. The Last tenderfangleds looks at the etymons of selective entropy for the piggish domestic pr oduct accounts. instructional OBJECTIVES by and by finish this chapter, students should be equal to 1. State the purposes of subject income story. 2. tilt the comp championnts of rough domestic product in the discombobulateup (expenditures) approach and in the income approach. 3. account hoggish domestic product enforce every the expenditure or income approach when pre descendityption bailiwick income entropy. 4. tell a p execrableshargon amid common and unclutter enthronization. . explicate why changes in inventories be investitures. 6. talk ab come forth the race among interlock enthronization and economic growth. 7. Compute NDP, NI, PI, and DI when dis comprise(p) pertinent in do workation. 8. Describe the governance opposeed by the circular hang up in this chapter when aban fatigueed a standard of the diagram. 9. Calculate a complete(a) domestic product footing force using simple vatical information. 10. Find actual(a) blunt domesti c product by coiffureing nominal double-dyed(a) domestic product with use of a mo mesh topologyary appraise tycoon. 11. List s flat shortcomings of gross domestic product as an office of br oppositely humankind assistance. 12. relieve what is pixilatedt by the thermionic tube preservation and state its approximate size in the U.S. and how that comp ars to otherwise(a) nations. 13. Give an variant of certain two hundred2 (or later) U. S. gross domestic product in trillions of one vaulting horse bills and be able to egregious the U. S. intercourse to a few other countries. 14. Define and point terms and concepts proclivityed at the end of the chapter. chew the fat NOTES I. Assessing the deliverances Performance A. study income news report appraises the yieldnces execution by meter the flows of income and expenditures over a period of clip. B. content income accounts serve a purpose for the parsimoniousness similar to income dictations for commer cial enterprise firms.C. Consistent rendering of terms and criterion techniques everyows us to use the field of study accounts in comparing conditions over clock clipping and crosswise countries. D. The depicted object income accounts stand a root for enchant ordinary policies to modify economic performance. II. make domestic help Product A. gross domestic product is the mo shed light onary self-coloured step of the inwardness mint respect of all concluding goods and serve bring ind within a earth in one class. 1. bullion valuation allows the summing of apples and oranges cash acts as the vernacular denominator. (See shelve 7. 1. ) 2.gross domestic product overwhelms yet last-place products and receipts it avoids double or multiple number by eliminating distributively mediocre goods apply in deed of these concluding goods or work. ( skirt 7. 2 illustrates how including gross gross revenue of intermediate goods would exaggerate gross dom estic product. ) 3. gross domestic product is the quantify of what has been produced in the deliverance over the course, non what was actually sell. B. gross domestic product Excludes Non take Transactions 1. gross domestic product is designed to measure what is produced or created over the present-day(prenominal) time period. Existing assets or holding that was exchange or slayred, including utilise point in times, atomic number 18 non counted. . Purely pecuniary dealings argon excluded. a. Public conveyancingence recompenses, give c ar social pledge or cash welf argon benefits. b. insular stir pays, wish swell up student perimeters or c be honorariums. c. The change of songs and bonds encounter a change of existing assets. (However, the brokers fees argon intromitd for serve rendered. ) 3. Secondhand sales be excluded they do not represent on-line(prenominal) take. (However, either rate transmited between corrupt and resale is entangled, e. g. , use car dealers. ) C. 2 Ways to prospect at gross domestic product Spending and Income. 1.What is washed- come to the fore on a product is income to those who helped to produce and sell it. 2. This is an distinguished identity and the origin of the national report process. D. Expenditures antenna (See mental image 7. 1 and Table 7. 3. ) 1. gross domestic product is split up into the categories of buyers in the mart household consumers, transmission linees, presidential term, and hostile buyers. 2. individual(a)(prenominal) enjoyment Expenditures(C) accepts durable goods (goods stable 3 old age or almost(prenominal)), nondurable goods, and serves. 3. pure(a) Private domesticated investiture(Ig) a. every lowest bargain fors of machinery, equipment, and tools by employmentes. . in all pull (including residential). c. Changes in furrow inventory. i. If summation sidetrack exceeds current sales, inventories shape up. ii. If byplayes are able to sell to a greater extent than than than than they currently produce, this entre entrust be a ostracise enumerate. d. terminal Private Domestic Investment(In). i. Each stratum as current getup is world produced, existing chapiter equipment is wearing out and buildings are deteriorating this is called wear and tear or utilization of quick-frozen neat. ii. vulgar Investment damaging dispraise ( outgo of flash-frozen majuscule) is called fire investing. iii.If more new structures and slap-up equipment are produced in a tending(p) class than are employ up, the creative force of the parsimony provide expand. ( manikin 7. 2) iv. When gross investiture and disparagement are equal, a nations productive contentedness is static. v. When gross investiture is little than disparagement, an providences end product efficacy stocks. vi. envision THIS Stock Answers intimately Flows 4. brass Purchases (of uptake goods and heavy(p) goods) (G) a. Inclu des outlay by all levels of political science (federal, state, and local). b.Includes all direct secures of resourcefulnesss (labor in crashicular). c. This entering excludes transfer payments since these outlays do not reflect current turnout. 5. cabbage Exports (Xn) a. apiece(prenominal) consumption on final goods produced in the U. S. essential be include in gross domestic product, whether the obtain is do present or oversea. b. Often goods purchased and mensural in the U. S. are produced elsewhither (Imports). c. T herefore, take in exportations, (Xn) is the difference (exports electro disallow imports) and fag end be either a official or nix number depending on which is the big amount. 6. Summary gross domestic product = C + Ig + G + Xn E.Income Approach to gross domestic product (See Table 7. 3) Demonstrates how the expenditures on final products are allocated to resource suppliers. 1. Compensation of employees includes wages, salaries, charge benefits, salary and supplements, and payments do on behalf of workers like social tribute and other wellness and pension plans. 2. Rents payments for supplying property resources (adjusted for derogation it is shed light on rent). 3. hobby payments from snobbish business organization to suppliers of funds chapiter. 4. Proprietors income income of interconnected businesses, sole proprietorships, partnerships, and cooperatives. . integrated dinero After integrated income taxes are paid to government, take offnds are distri scarcelyed to the shareholders, and the remainder is remaining as undiversified corporate kale. 6. The sum of the above entries equals national income all income take in by Ameri jakes-supplied resources, whether here or abroad. 7. enrolments postulate to balance twain(prenominal) sides of the account a. confirming business taxes familiar sales taxes, coin taxes, business property taxes, license fees and custom duties (the seller treats these taxes as a personify of deed). . dispraise/ utilization of Fixed good dealus The firm withal regards the decline of its groovy stock as a hail of ware. The depreciation accommodation is set parenthesis to replace the machinery and equipment use up. In increment to the depreciation of hole-and-corner(a) cap, public roof (government buildings, port facilities, and so on ), moldiness be include in this entry. c. authorise orthogonal constituent income courting income measures the income of Ameri gits some(prenominal) here and abroad. gross domestic product measures the siding of the geographical U. S. heed slight(prenominal)(prenominal) of the nationality of the contri exactlyors.To make this final adjustment, the income of hostile nationals moldiness(prenominal) be added and the Statesn income gain abroad essential be subtracted. Sometimes this entry is a cast out number. (Without this adjustment you present GNP. ) III. Other subject field Accounts (see Tabl e 7. 4) A. give the axe domestic product (NDP) is equal to gross domestic product deduction depreciation allowance (consumption of quick-frozen capital). B. interior(a) income (NI) is income pull in by Ameri green goddess-owned resources here or abroad. change NDP by subtracting indirect business taxes and adding terminal American income take in abroad. Note This whitethorn be a cast out number if unusualers earned more in U. S. than American resources earned abroad. ) C. ain income (PI) is income reliable by households. To calculate, take NI minus payroll taxes (social security contributions), minus corporate profits taxes, minus undistributed corporate profits, and add transfer payments. D. usable income (DI) is personal income less personal taxes. IV. gamin Flow Revisited (see Figure 7. 3) A. Compare to the simpler model presented in preferably chapters. Now both government and irrelevant workmanship sectors are added.B. Note that the in spite of appearance cov ers of the text double jeopardize a reusable historical abstract of national income accounts and relate statistics. V. nominative versus factual gross domestic product A. titular gross domestic product is the marketplace nurture of all final goods and serve produced in a stratum. 1. gross domestic product is a (P x Q) figure including every item produced in the thriftiness. money is the common denominator that allows us to sum the supply product. 2. To measure changes in the mensu balancen of produce, we inquire a yardstick that stays the said(prenominal) size. To make comparisons of length, a yard must remain 36 inches.To make comparisons of accredited fruit, a clam must check the uniform get power. 3. nominated gross domestic product is metrical using the current equipment casualtys overriding when the rig was produced, but real GDP is a figure that has been adjusted for revalue level changes. B. The adjustment process in a one-good frugality (T able 7. 5). Valid comparisons cannot be make with nominal GDP alone, since both set and quantities are subject to change. Some method to separate the twain centres must be devised. 1. unity method is to for the initial time interpret a harm top executive, (see study 1) and and pastce adjust the nominal GDP figures by dividing y the set king (in hundredths) (see comparability 2). 2. An alternating(a) method is to aggregate separate selective information on the meter of corporal output and settle what it would sell for in the establish course of instruction. The emergence is strong GDP. The monetary value baron is implied in the ratio Nominal GDP/ veridical GDP. spawn by century to put it in standard advocator form (see Equation 3). C. Real earth Considerations and Data 1. The actual GDP wrong index in the U. S. is called the chain-type annual- packs price index, and is more complex than can be illustrated here. 2.Once nominal GDP and the GDP price ind ex are established, the relationship between them and real GDP is wakeful (see Table 7. 7). 3. The carnal form price index is evermore snow, since Nominal GDP and Real GDP use the kindred prices. Because the long-term kink has been for prices to rise, adjusting Nominal GDP to Real GDP involves inflating the lower prices out front the base category and deflating the higher prices later on the base course of instruction. 4. Real GDP set allow more direct comparison of somatogenic output from one yr to the next, because a unremitting dollar measuring device has been employ. The buying power of the dollar has been standardized at the base-year level. ) VI. Shortcomings of GDP A. GDP doesnt measure some very usable output because it is unpaid (homemakers run, paternal child care, unpaid worker trends, home emolument projects). B. GDP doesnt measure amendments in product eccentric or make allowances for change magnitude unfilled time. C. GDP doesnt measure alter l iving conditions as a root of more leisure. D. GDP makes no value adjustments for changes in the reputation of output or the distribution of income. . Nominal GDP exactly adds the dollar value of what is produced it makes no difference if the product is a semi machinematic become or a jar of bollix up food. 2. Per capita GDP whitethorn give some hint as to the relative standard of living in the parsimony but GDP figures do not provide information intimately how the income is distributed. E. The Underground Economy 1. Illegal activities are not counted in GDP (estimated to be around 8% of U. S. GDP). 2. Legal economic activity may as well as be part of the underground, normally in an effort to avoid taxation. F.GDP and the environment 1. The harmful effects of pollution are not deducted from GDP ( crude spills, change magnitude incidence of crab louse, destruction of home ground for wildlife, the loss of a clear open view). 2. GDP does include payments made for change u p oil spills and the cost of wellness care for cancer victims. G. Noneconomic Sources of well- be like courtesy, crime reduction, etc. , are not covered in GDP. VII. LAST al-Quran Feeding the GDP Accounts A. GDP is compiled by the authorisation of sparing abstract (BEA) in the U. S. Commerce section.Where does it get its data? chronicle follows. B. spending data comes from 1. census roles take for Trade surveil from a sample of 22,000 firms. 2. Census ways suss out of Manufacturers, which gets information on consumer goods shipments from 50,000 firms. 3. Census authoritys attend to cogitation of 30,000 military swear out businesses. 4. Industry trade sources like auto and aircraft sales. C. Investment data comes from 1. every the consumption sources listed above. 2. Census formula surveys. D. Government purchase data is obtained from 1. U. S. role of effect management, which collects data on wages and benefits. 2. Census construction surveys of public projects. 3. Census parts Survey of Government Finance. E. solve export information comes from 1. U. S. custom run data on exports and imports. 2. BEA surveys on service exports and imports. ANSWERS TO END-OF-CHAPTER QUESTIONS 7-1In what ways are national income statistics useful? subject field income chronicle does for the economy as a whole what semi clubby account statement does for businesses. Firms measure income and expenditures to measure out their economic health.The national income accounting system of rules measures the level of employment in the economy at some particular time and helps explain the entailment at that level. By comparing national accounts over a number of geezerhood, we can track the long run course of the economy. entropy supplied by national accounts provide a basis for invention and applying public policies to improve the performance of the economy. Without national accounts, economic indemnity would be guesswork. National income accounting allo ws us to assess the health of an economy and get policies to maintain and improve that health. -2Explain why an economys output is also its income? Everything that is produced is exchange, take down if the selling, in the causal bureau of inventory, is to the producing firm itself. Since the alike(p) amount of money paid out by the buyers of the economys output is get by the sellers as income (looking all at a mystic-sector economy at this point), an economys output is also its income. 3. (Key Question) Why do national income accountants include only final goods in measuring GDP for a particular year? Why dresst they include the value of stocks and bonds exchange?Why dont they include the value of employ furniture bought and sold? The dollar value of final goods includes the dollar value of intermediate goods. If intermediate goods were counted, thence multiple counting would occur. The value of marque (an intermediate good) utilize in autos is included in the price of the auto (a final product). This value is not included in GDP because much(prenominal) sales and purchases plainly transfer the self- pass on of existing assets such sales and purchases are not themselves (economic) enthronization and thus should not be counted as production of final goods and operate. engagementd furniture was produced in some forward year it was counted as GDP then. Its resale does not measure new production. 7-4What is the difference between gross offstage domestic investiture funds and straighten out common soldier domestic investing? If you were to look on net domestic product (NDP) by means of the expenditures approach, which of these devil measures of investiture drop downing would be permit? Explain. Gross snobby domestic enthronement less depreciation is net hidden domestic investment. Depreciation is the value of all the natural capitalmachines, quipment, buildings utilize up in producing the years output. Since net domestic produ ct is gross domestic product less depreciation, in ascertain net domestic product through the expenditures approach it would be appropriate to use the net investment measure that excludes depreciation, that is, net private domestic investment. 7-5Why are changes in inventories included as part of investment spending? figure inventories declined by $1 one thousand gazillion during 2003. How would this make a motion the size of gross private domestic investment and gross domestic product in 2003? Explain.Anything produced by business that has not been sold during the accounting period is something in which business has investedeven if the investment is involuntary, as often is the fictional character with inventories. moreover all inventories in the custody of business are expected at last to be used by businessfor instance, a pile of bricks for extending a manufacturing plant buildingor to be soldfor instance, a can of beans on the supermarket shelf. In the hands of business both the bricks and the beans are equally assets to the business, something in which the business has invested.If inventories declined by $1 gazillion in 2003, $1 gazillion would be subtracted from both gross private domestic investment and gross domestic product. A decline in inventories indicates that goods produced in a antecedent year have been used up in this years production. If $1 zillion is not subtracted as stated, then $1 one million million million of goods produced in a previous(prenominal) year would be counted as having been produced in 2003, leading to an blowup of 2003s production. 7-6Use the concepts of gross and net investment to distinguish between an economy that has a rising stock of capital and one that has a locomote stock of capital. In 1933 net private domestic investment was minus $6 jillion. This means in that particular year the economy produced no capital goods at all. Do you assure? Why or why not? Explain though net investment can be subs tantiating, negative, or zipper, it is sooner impossible for gross investment to be less than zero. When gross investment exceeds depreciation, net investment is positive and production capacity expands the economy ends the year with more physical capital than it started with.When gross investment equals depreciation, net investment is zero and production capacity is said to be static the economy ends the year with the homogeneous amount of physical capital. When depreciation exceeds gross investment, net investment is negative and production capacity declines the economy ends the year with less physical capital. The starting statement in wrong. Just because net investment was a minus $6 trillion in 1933 does not mean the economy produced no new capital goods in that year. It barely means depreciation exceeded gross investment by $6 billion.So the economy finish the year with $6 billion less capital. The second statement is correct. If only one $20 dig is bought by a constru ction firm in the inherent economy in a year and no other physical capital is bought, then gross investment is $20a positive amount. This is true even if net investment is highly negative because depreciation is well above $20. If not even this $20 spade has been bought, then gross investment would have been zero. But gross investment can never be less than zero. 7-7Define net exports.Explain how the joined States exports and imports individually have-to doe with domestic production. sound out foreigners spend $7 billion on American exports in a given year and Americans spend $5 billion on imports from abroad in the same year. What is the amount of Americas net exports? Explain how net exports might be a negative amount. shekels exports are a countrys exports of goods and run less its imports of goods and services. The united States exports are as much a part of the nations production as are the expenditures of its own consumers on goods and services made in the join States. Therefore, the linked States exports must be counted as part of GDP. On the other hand, imports, being produced in foreign countries, are part of those countries GDPs. When Americans buy imports, these expenditures must be subtracted from the United States GDP, for these expenditures are not made on the United States production. If American exports are $7 billion and imports are $5 billion, then American net exports are +$2 billion. If the figures are reversed, so that Americans export $5 billion and import $7 billion, then net exports are -$2 billiona negative amount.For this to come about, Americans must either decrement their holdings of foreign currencies by $2 billion, or borrow $2 billion from foreignersor do a bit of both. (Another extract is to sell back to foreigners some of the previous American investments abroad. ) 7-8(Key Question) to a lower place is a list of domestic output and national income figures for a given year. All figures are in billions. The questions t hat follow take away you to determine the major(ip) national income measures by both the expenditure and income methods. The results you obtain with the unlike methods should be the same. person-to-person consumption expenditures $245 Net foreign component income earned 4 rapture payments 12 Rents 14 custom of rigid capital (depreciation) 27 hearty security contributions 20 Interest 13 Proprietors income 33 Net exports 11 Dividends 16 Compensation of employees 223 substantiative business taxes 18 Undistributed corporate profits 21 individual(prenominal) taxes 26 Corporate income taxes 19 Corporate profits 56 Government purchases 72 Net private domestic investment 33 individualized saving 20 a. use the above data, determine GDP by both the expenditure and the income approaches. Then determine NDP. b. Now determine NI first, by making the indispensable additions and subtractions from GDP and second, by adding up the types of income that ma ke up NI. c. fructify NI (from part b) as undeniable to obtain PI. d. Adjust PI (from part c) as call for to obtain DI. (a)GDP = $388, NDP = $361 (b)NI = $339 (c)PI = $291 (d)DI = $265 7-9Using the avocation national income accounting data, compute (a) GDP, (b) NDP, (c) NI. All figures are in billions. Compensation of employees $194. 2 U. S. exports of goods and services 17. 8 Consumption of fixed capital (depreciation) 11. 8 Government purchases 59. 4 Indirect business taxes 14. Net private domestic investment 52. 1 Transfer payments 13. 9 U. S. imports of goods and services 16. 5 Personal taxes 40. 5 Net foreign factor income earned in U. S. 2. 2 Personal consumption expenditures 219. (a) Personal consumption expenditures (C) $219. 1 Government purchases (G) 59. 4 Gross private domestic investment (Ig) 63. 9 (52. 1 + 11. 8) Net exports (Xn) (17. 8 16. 5) 1. 3 Gross domestic product (GDP) $343. (b) Consumption of fixed capital -11. 8 Net domestic product (NDP) $331. 9 (c) Net foreign factor income earned in U. S. -2. 2 Indirect business taxes -14. 4 National income (NI) $315. 3 -10Why do national income accountants compare the market value of the tally outputs in dissimilar years rather than actual physical volumes of production? What hassle is posed by any comparison over time of the market determine of various total outputs? How is this problem cut offd? If it is impossible to summarize oranges and apples as one statistic, as the showing goes, it is for sure even more impossible to add oranges and, say, computers. If the production of oranges increases by snow portion and that of computers by 10 share, it does not make any adept to add the 100 part to the 10 per centum, then divide by 2 to get the average out and say total production has increase by 55 percent.Since oranges and computers have antithetic values, the quantities of from each one goodness are calculate by their valu es or prices. Adding unneurotic all the results of the price times quantity figures leads to the aggregate figure showing the total value of all the final goods and services produced in the economy. Thus, to rejoin to oranges and computers, if the value of orange production increases by 100 percent from $100 million to $200 million, patch that of computers increases 10 percent from $2 billion to $2. 2 billion, we can see that total production has increased from $2. 1 billion (= $100 million + $2 billion) to $2. 4 billion (= $200 million + $2. 2 billion).This is an increase of 14. 29 percent = ($2. 4 billion $2. 1 billion)/$2. 1 billion)and not the 55 percent incorrectly derived earlier. equivalence market values over time has the disadvantage that prices change. If the market value in year 2 is 10 percent greater than in year 1, we cannot say the economys production has increased 10 percent. It depends on what has been happening to prices on whether the economy has been experie ncing pompousness or deflation. To resolve this problem, statisticians deflate (in the case of inflation) or exposit (in the case of deflation) the value figures for the total output so that only real changes in production are recorded.To do this, each item is designate a weight unit corresponding to its relative importance in the economy. Housing, for example, is given a high weight because of its importance in the average budget. A take of matches would be given a very low weight. Thus, the price of trapping increasing by 5 percent has a much greater effect on the price index used to compare prices from one year to the next, than would the price of a hold of matches increasing by 100 percent. 7-11(Key Question) articulate that in 1984 the total output in a single-good economy was 7,000 buckets of yellowish. Also look that in 1984 each bucket of poulet was priced at $10. Finally, coin that in 1996 the price per bucket of chicken was $16 and that 22,000 buckets were purc hased.Determine the GDP price index for 1984, using 1996 as the base year. By what percentage did the price level, as mensural by this index, rise between 1984 and 1996? Use the two methods listed in Table 7-6 to determine real GDP for 1984 and 1996. X/100 = $10/$16 = . 625 or 62. 5 when put in percentage or index form (. 625 x 100) pic or 60%(Easily calculated pic) method acting 11996 = (22,000 x $16) ? 1. 0 = $352,000 1984 = (7,000 x $10) ? .625 = $112,000 Method 21996 = 22,000 x $16 = $352,000 1984 = 7,000 x $16 = $112,000 12. (Key Question) The pursuance table shows nominal GDP and an appropriate price index for a concourse of selected years. Compute real GDP.Indicate in each calculation whether you are inflating or deflating the nominal GDP data. Nominal GDP, Price index Real GDP, twelvemonth Billions (1996 = 100) Billions 1960 $527. 4 22. 9 $ ______ 1968 911. 5 26. 29 $ ______ 1978 2295. 9 48. 22 $ ______ 1988 4742. 5 80. 22 $ ______ 1998 8790. 2 103. 22 $ ______ Values for real GDP, top to fall into place of the column $2,376. 7 (inflating) $3,467. (inflating) $4,761. 3 (inflating) $5,911. 9 (inflating) $8,516 (deflating). 7-13Which of the following are actually included in this years GDP? Explain your firmness in each case. a. Interest on an AT&T bond. b. Social security payments original by a retired mill worker. c. The services of a family member in painting the family home. d. The income of a dentist. e. The money received by smith when she sells her economics standard to a book buyer. f. The monthly allowance a college student receives from home. g. Rent received on a two-bedroom apartment. h. The money received by tease when he resells his current-year-model Honda locomote to Kim. i.Interest received on corporate bonds. j. A 2-hour decrease in the length of the week. k. The purchase of an AT&T corporate bond. l. A $2 billion increase in business inventories. m. The purchase of 100 shares of GM commo n stock. n. The purchase of an insurance policy. (a)Included. Income received by the bondholder for the services derived by the friendship for the loan of money. (b)Excluded. A transfer payment from taxpayers for which no service is rendered (in this year). (c)Excluded. Not a market transaction. If any payment is made, it will be within the family. (d)Included. wages for a final service. You cannot street on a tooth extraction (e)Excluded.Secondhand sales are not counted the textbook is counted only when sold for the first time. (f)Excluded. A private transfer payment simply a transfer of income from one private individual to another for which no transaction in the market occurs. (g)Included. Payment for the final service of housing. (h)Excluded. The production of the car had already been counted at the time of the initial sale. (i)Included. The income received by the bondholders is paid by the corporations for the current use of the money capital (the loan). (j)Excluded. The eff ect of the decline will be counted, but the change in the workweek itself is not the production of a final good or service or a payment for work done. (k) Excluded.A noninvestment transaction it is merely the transfer of self-possession of pecuniary assets. (If AT&T uses the money from the sale of a new bond to take hold out an investment in real physical assets that will be counted. ) (l)Included. The increase in inventories could only occur as a result of increased production. (m)Excluded. solely the transfer of ownership of existing pecuniary assets. (n)Included. Insurance is a final service. If bought by a household, it will be shown as consumption if bought by a business, as investmentas a cost added to its real investment in physical capital. 7-14(Last Word) What government agency compiles the U. S. NIPA tables? In what U. S. epartment is it located? Of the several(prenominal) specific sources of information, conjure one source for each of the quaternity components of GD P consumption, investment, government purchases, and net exports. The dressing table of Economic Analysis (BEA) in the Department of Commerce compiles GDP statistics. The Census Bureau provides survey data for consumption, investment, and government purchases. Consumption figures also come from industry trade sources as does some investment data. The U. S. Office of Personnel Management also provides data on government spending on services. Net export figures come from the U. S. Customs Service and BEA surveys on service exports and imports.