Eco202 Mod 2 Case

MODULE 2 CASE

December 23, 2013

Jesse Reed

ECO 202

In this Module, a table was given for use to determine the value of GDP. After reviewing the table I’ve determined that the value of GDP is $2,080 billion. Personal consumption expenditures, gross private domestic investment, net exports, and government purchases of goods and services were all used in the calculation of GDP. Imports and transfer payments do not qualify as variables of GDP because they do not meet the criteria of any of the categories of GDP.

In each of the following cases, I will indicate if GDP is affected, under what category and what happens to GDP. Not all cases will be included in GDP and I will explain why or why not a case was or was not used.

Case I- You buy a used textbook from one of your classmates.

For this case, the textbook being purchased would not affect GDP assuming it was not produced and purchased in the same year. Any good or product produced in another year but sold in a different year is not included in GDP. However, if the textbook was produced and purchased in the same year by your classmate, and then you purchased it in the same year from your classmate, it would affect GDP. Assuming the textbook is a used product produced in one year and sold in another, it will not affect GDP and fall into the category of Used Products.

Case II- You buy a new umbrella.

This case presents the exact opposite of the previous one. You buy a new umbrella and it is considered an object that falls into the category of Consumption. Goods and services bought by households are called Consumption. Because this item falls into the Consumption category, the product itself does affect GDP.

Case III- Ella, a French tourist, has a haircut in a salon in San Francisco.

This case presents another item that falls into he category of Consumption. A haircut is a consumable and therefore affects GDP.

Case IV- Oklahoma cleans up after a devastating tornado.

This particular case...