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
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.
To answer your questions and make sure the answers are accurate, I will guide you through the steps to find the information in the US National Income and Product Accounts (NIPA) and the circular flow of expenditure and income.
1. Where in the US National Income and Product Accounts and the circular flow of expenditure and income do new home sales appear?
In the circular flow model, new home sales appear in the goods and services market. To confirm this information in the US National Income and Product Accounts, you can follow these steps:
- Go to the official website of the Bureau of Economic Analysis (BEA) at www.bea.gov.
- Navigate to the "National" section.
- Find and click on "National Income and Product Accounts (NIPA)."
- Look for the relevant NIPA tables, such as "Table 1.1.5. Gross Domestic Product" or "Table 1.16. Final Sales of Domestic Product."
- Identify the component related to new home sales, which would typically fall under "Investment" or "Residential Fixed Investment."
By following these steps on the BEA website, you can locate the specific information about where new home sales appear in the US National Income and Product Accounts.
2. How does a fall in new home sales affect real GDP? Explain.
A fall in new home sales affects real GDP by reducing the level of investment or residential fixed investment. This reduction in investment leads to a decrease in the overall level of economic activity, which affects the calculation of real GDP. When fewer new homes are being built and sold, it means there are fewer final goods and services included in the measurement of real GDP. This decline in new home sales then contributes to a decrease in 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?
Based on the information provided, we can infer that the compensation of employees increased but at a slower rate than corporate profits. The rise in corporate profits suggests that businesses are earning more, which could be due to various factors like increased productivity, higher sales, or cost-cutting measures. Real GDP increasing by 3.8% indicates overall economic growth, which should reflect positively on employee compensation. However, if the rise in profit (5.2%) is higher than the increase in real GDP (3.8%), it suggests that employees were not compensated as much as the increase in corporate profits. In other words, the rise in profits outpaced the growth in employee compensation.
Keep in mind that these explanations are based on the given information and understanding of macroeconomics principles. It is always recommended to refer to official statistical sources or consult experts for accurate and up-to-date information.