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Posted by on Thursday, September 11, 2008 at 11:10am.

Can someone check this for me?

1. Where in the US National Income and Product Accounts and the circular flow of expenditure and income do new home sales appear?

ANSWER: I said they appear with money going from the households to the goods and services market.

2. How does a fall in new homes sales affect real GDP? Explain.

ANSWER: I said it affects real GDP by causing it to decline because less new homes are being built so there are less final goods and services to be calculated in the real GDP.

3. If corporate profits rose by 5.2% and real GDP increased by 3.8%, what do you think happened to the compensation of employees.

ANSWER: Employees were contemplated more due to the rise in GDP, but they were not compensated as much as the rise in profit. The rise in profit was higher than the employee compensation.

Thanks

  • Macroeconomics - , Thursday, September 11, 2008 at 11:50am

    1) Hummmm. Home sales is a toughie in the NIPA accounts. I believe that in the NIPA accounts, new homes sales are counted as private domestic investment. Check the NIPA accounts under www.BEA.GOV for more info.

    2) I agree

    3) You are probably right. However, in theory, one could get a rise in corporate profits and an increase in GDP without any increases in real wages.

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