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AP Macroeconomics › Tables
Each of the following is included in the gross domestic product EXCEPT .
Transfer payments
Consumption
Government Expenditures
Net Exports
Explanation
To calculate the GDP, we add consumption, investment, government expenditures, and net exports.
Transfer payments, such as social security, welfare, and unemployment checks, on the other hand, are not included in the calculation of the GDP.
Countries A & B can produce the following maximum quantities of cars and computers (when they use all their resources to produce one of the goods):
Country A: 500 computers OR 200 cars
Country B: 300 computers OR 100 cars
If these countries were to trade, which of the following options give the trade outcomes that would result?
Country A would produce most of the cars and Country B would produce most of the computers
Country B would produce most of the cars and Country A would produce most of the computers
Country A would produce more cars and more computers and trade them with Country B since they have a comparative advantage in producing both goods
There would be no agreeable terms of trade since Country A produces more cars and more computers than Country B does.
There is not enough information to answer the question as stated
Explanation
To answer this question, you would have to tabulate the opportunity costs of both Country A and Country B in the production of cars and computers, this will allow you to consider what trades are possible and which are not. This would be the result of the table:
Opp costs of computer production
Country A: 1 computer = 0.4 cars
Country B: 1 computer = 0.3 cars
Opp costs of car production
Country A: 1 car = 2.5 computers
Country B: 1 car = 3 computers
This tells us that Country B will produce the majority of the computers, since they have a comparative advantage in that, and Country A will produce most of the cars since they have a comparative advantage in that.
Each of the following is included in the gross domestic product EXCEPT .
Transfer payments
Consumption
Government Expenditures
Net Exports
Explanation
To calculate the GDP, we add consumption, investment, government expenditures, and net exports.
Transfer payments, such as social security, welfare, and unemployment checks, on the other hand, are not included in the calculation of the GDP.
Countries A & B can produce the following maximum quantities of cars and computers (when they use all their resources to produce one of the goods):
Country A: 500 computers OR 200 cars
Country B: 300 computers OR 100 cars
If these countries were to trade, which of the following options give the trade outcomes that would result?
Country A would produce most of the cars and Country B would produce most of the computers
Country B would produce most of the cars and Country A would produce most of the computers
Country A would produce more cars and more computers and trade them with Country B since they have a comparative advantage in producing both goods
There would be no agreeable terms of trade since Country A produces more cars and more computers than Country B does.
There is not enough information to answer the question as stated
Explanation
To answer this question, you would have to tabulate the opportunity costs of both Country A and Country B in the production of cars and computers, this will allow you to consider what trades are possible and which are not. This would be the result of the table:
Opp costs of computer production
Country A: 1 computer = 0.4 cars
Country B: 1 computer = 0.3 cars
Opp costs of car production
Country A: 1 car = 2.5 computers
Country B: 1 car = 3 computers
This tells us that Country B will produce the majority of the computers, since they have a comparative advantage in that, and Country A will produce most of the cars since they have a comparative advantage in that.
Countries A & B can produce the following maximum quantities of cars and computers (when they use all their resources to produce one of the goods):
Country A: 500 computers OR 200 cars
Country B: 300 computers OR 100 cars
If these countries were to trade, which of the following options give the trade outcomes that would result?
Country A would produce most of the cars and Country B would produce most of the computers
Country B would produce most of the cars and Country A would produce most of the computers
Country A would produce more cars and more computers and trade them with Country B since they have a comparative advantage in producing both goods
There would be no agreeable terms of trade since Country A produces more cars and more computers than Country B does.
There is not enough information to answer the question as stated
Explanation
To answer this question, you would have to tabulate the opportunity costs of both Country A and Country B in the production of cars and computers, this will allow you to consider what trades are possible and which are not. This would be the result of the table:
Opp costs of computer production
Country A: 1 computer = 0.4 cars
Country B: 1 computer = 0.3 cars
Opp costs of car production
Country A: 1 car = 2.5 computers
Country B: 1 car = 3 computers
This tells us that Country B will produce the majority of the computers, since they have a comparative advantage in that, and Country A will produce most of the cars since they have a comparative advantage in that.
Each of the following is included in the gross domestic product EXCEPT .
Transfer payments
Consumption
Government Expenditures
Net Exports
Explanation
To calculate the GDP, we add consumption, investment, government expenditures, and net exports.
Transfer payments, such as social security, welfare, and unemployment checks, on the other hand, are not included in the calculation of the GDP.
Each of the following is included in the gross domestic product EXCEPT .
Transfer payments
Consumption
Government Expenditures
Net Exports
Explanation
To calculate the GDP, we add consumption, investment, government expenditures, and net exports.
Transfer payments, such as social security, welfare, and unemployment checks, on the other hand, are not included in the calculation of the GDP.
Countries A & B can produce the following maximum quantities of cars and computers (when they use all their resources to produce one of the goods):
Country A: 500 computers OR 200 cars
Country B: 300 computers OR 100 cars
If these countries were to trade, which of the following options give possible terms of trade?
Explanation
To answer this question, you would have to tabulate the opportunity costs of both Country A and Country B in the production of cars and computers, this will allow you to consider what trades are possible and which are not. This would be the result of the table:
Opp costs of computer production
Country A: 1 computer = 0.4 cars
Country B: 1 computer = 0.3 cars
Opp costs of car production
Country A: 1 car = 2.5 computers
Country B: 1 car = 3 computers
This tells us that Country B will produce the majority of the computers, since they have a comparative advantage in that, and Country A will produce most of the cars since they have a comparative advantage in that. It follows then, that any terms of trade where Country A has to pay more than 0.4 cars for a computer would be unacceptable since then they would be better off making them themselves. Similarly, any terms of trade where Country B has to pay more than 3 computers to get a car would be unacceptable for the same reason. The only acceptable terms of trade in the options are 1 computer = 0.35 cars.
Countries A & B can produce the following maximum quantities of cars and computers (when they use all their resources to produce one of the goods):
Country A: 500 computers OR 200 cars
Country B: 300 computers OR 100 cars
If these countries were to trade, which of the following options give possible terms of trade?
Explanation
To answer this question, you would have to tabulate the opportunity costs of both Country A and Country B in the production of cars and computers, this will allow you to consider what trades are possible and which are not. This would be the result of the table:
Opp costs of computer production
Country A: 1 computer = 0.4 cars
Country B: 1 computer = 0.3 cars
Opp costs of car production
Country A: 1 car = 2.5 computers
Country B: 1 car = 3 computers
This tells us that Country B will produce the majority of the computers, since they have a comparative advantage in that, and Country A will produce most of the cars since they have a comparative advantage in that. It follows then, that any terms of trade where Country A has to pay more than 0.4 cars for a computer would be unacceptable since then they would be better off making them themselves. Similarly, any terms of trade where Country B has to pay more than 3 computers to get a car would be unacceptable for the same reason. The only acceptable terms of trade in the options are 1 computer = 0.35 cars.
Countries A & B can produce the following maximum quantities of cars and computers (when they use all their resources to produce one of the goods):
Country A: 500 computers OR 200 cars
Country B: 300 computers OR 100 cars
If these countries were to trade, which of the following options give possible terms of trade?
Explanation
To answer this question, you would have to tabulate the opportunity costs of both Country A and Country B in the production of cars and computers, this will allow you to consider what trades are possible and which are not. This would be the result of the table:
Opp costs of computer production
Country A: 1 computer = 0.4 cars
Country B: 1 computer = 0.3 cars
Opp costs of car production
Country A: 1 car = 2.5 computers
Country B: 1 car = 3 computers
This tells us that Country B will produce the majority of the computers, since they have a comparative advantage in that, and Country A will produce most of the cars since they have a comparative advantage in that. It follows then, that any terms of trade where Country A has to pay more than 0.4 cars for a computer would be unacceptable since then they would be better off making them themselves. Similarly, any terms of trade where Country B has to pay more than 3 computers to get a car would be unacceptable for the same reason. The only acceptable terms of trade in the options are 1 computer = 0.35 cars.