/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q. 12 A number of economists contend t... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 8: Q. 12 (page 186)

A number of economists contend that official measures of U.S. gross private investment expenditures are understated. For instance, household spending on education, such as college tuition expenditures, is counted as consumption. Some economists suggest that these expenditures, which amount to 6 percent of GDP, should be counted as investment instead. Based on this 6 percent estimate and the GDP computations detailed in Figure 8-3, how many billions of dollars would shift from consumption to investment if this suggestion was adopted?

Short Answer

Expert verified

As a result, if this proposal is approved, a transfer of 6%of GDP, or $1,092.6billion, will be added to investment spending.

Step by step solution

01

   Introduction

Households spend a significant portion of their budget on college tuition, which is an investment expense in some ways. As a result, it has been proposed that this component of consumption be viewed as an investment.

02

    Conclusion

According to current estimates, these expenditures amount to 6%of GDP, or $1092.6billion dollars. As a result, if this proposal is approved, a transfer of 6%of GDP, or $1092.6billion, will be added to investment spending.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Consider the table below for the economy of a nation whose residents produce five final goods.

Why might it be difficult to measure natural resource depletion or pollution and convert the resulting quantity into a dollar-denominated amount

Look back at Table 8-3, which explains how to calculate real GDP in terms of 2009constant dollars. Change the base year to2007. Recalculate the price index, and then recalculate real GDP-that is, express column4of Table 8-3 in terms of 2007dollars instead of 2009dollars.

Why might a range of dashboard economic indicators be difficult to include in one single measure such as GDP?

Each year after a regular spring cleaning, Maria spruces up her home a little by retexturing and repainting the walls of one room in her house. In a given year, she spends \(25on magazines to get ideas about wall textures and paint shades, \)45on newly produced texturing materials and tools, \(35on new paintbrushes and other painting equipment, and \)175on newly produced paint. Normally, she preps the walls, a service that a professional walltexturing specialist would charge \(200to do, and applies two coats of paint, a service that a painter would charge \)350to do, on her own.

a. When she purchases her usual set of materials and does all the work on her home by herself in a given spring, how much does Maria's annual spring texturing and painting activity contribute to GDP?

b. Suppose that Maria hurt her back this year and is recovering from surgery. Her surgeon has instructed her not to do any texturing work, but he has given her the go-ahead to paint a room as long as she is cautious. Thus, she buys all the equipment required to both texture and paint a room. She hires someone else to do the texturing work but does the painting herself. How much would her spring painting activity add to GDP?

c. As a follow-up to part (b), suppose that as soon as Maria bends down to dip her brush into the paint, she realizes that painting will be too hard on her back after all. She decides to hire someone else to do all the work using the materials she has already purchased. In this case, how much will her spring painting activity contribute to GDP?
See all solutions

Recommended explanations on Economics Textbooks

Taxation Economics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.