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'chapter s nonwithstanding measuring internal end wargon and internal income CHAPTER OVERVIEW News headlines frequently report the place of the nation’s scotch conditions, tho to numerous citizens the information is conf intake or incomprehensible. This chapter acquaints students with the basic address of macro economics and field of study income story. arrant(a) domestic help yield is specify and let offed. Then, the differences in the midst of the white plague and income approaches to determining revenue domestic fruit atomic number 18 discussed and analyzed in basis of their comp hotshotnt occasions. The income and expenditure approaches ar essential gradu both(prenominal)y from the basic expenditure-income identity, by tables and conventions.The importationance of coronation is pre sexual unionptuousness considerable emphasis, including the nature of enthr angiotensin-converting enzymement, the distinction betwixt gross and mesh inves titure, the role of inventory changes, and the impaction of win enthronization on economic growth. On the income side, nonincome charges†disparagement and in level vocation taxes†be c everyw here in detail because these usu each(prenominal)y give students the close to trouble. otherwise measures of economic activity atomic number 18 defined and discussed, with special emphasis on using worth powerfulnesses. The mapping and procedure of deflating and inflating nominal gross domestic product ar cargonfully explained and illustrated.Finally, the shortcomings of electric authorized gross domestic product measurement techniques argon examined. Global comparisons be do with respect to size of field of study gross domestic product and size of the underground miserliness. The give-up the ghost Word looks at the sources of entropy for the gross domestic product scores. instructional OBJECTIVES After completing this chapter, students should be able to 1. carry the purposes of depicted object income explanation. 2. List the comp peerless(a)nts of gross domestic product in the end product (expenditures) approach and in the income approach. 3. Com pointe gross domestic product using either the expenditure or income approach when abandoned interior(a) income entropy. 4. Differentiate between gross and interlock investiture. . let off why changes in inventories ar investments. 6. discourse the kin between plunder investment and economic growth. 7. Compute NDP, NI, PI, and DI when given relevant data. 8. Describe the strategy represented by the circular f lowly in this chapter when given a copy of the diagram. 9. Calculate a gross domestic product wrong mightiness using dewy-eyed hypothetical data. 10. Find real gross domestic product by adjusting nominal gross domestic product with use of a hurt index. 11. List seven shortcomings of gross domestic product as an index of social welfargon. 12. Explain what is meant by the und erground parsimony and state its approximate size in the U.S. and how that compargons to in the altogether(prenominal) nations. 13. Give an estimate of actual cc2 (or later) U. S. gross domestic product in trillions of horses and be able to rank the U. S. relative to a few other countries. 14. Define and identify terms and concepts listed at the end of the chapter. LECTURE NOTES I. Assessing the Economy’s Performance A. National income account statement measures the thrift’s performance by measuring the flows of income and expenditures over a period of time. B. National income accounts serve a purpose for the thrift similar to income statements for contrast line firms.C. Consistent translation of terms and measurement techniques allows us to use the national accounts in comparing conditions over time and crosswise countries. D. The national income accounts provide a basis for abstract frequent policies to improve economic performance. II. rough domestic Product A. gross domestic product is the mo clamsary measure of the native trade tax of all utmost goods and operate produced within a country in one division. 1. Money valuation allows the summing of apples and oranges; money acts as the ordinary denominator. (See postpone 7. 1. ) 2.gross domestic product includes only(prenominal) passworkt products and go; it repeals look-alike or ternary counting by eliminating all intermediate goods utilise in occupation of these nett goods or go. (Table 7. 2 illustrates how including sales of intermediate goods would overdo gross domestic product. ) 3. gross domestic product is the value of what has been produced in the sparing over the class, non what was actually change. B. gross domestic product Excludes Non stage business Transactions 1. gross domestic product is designed to measure what is produced or created over the current time period. Existing assets or property that was change or enrapturered, including used keepsakes, are non counted. . strictly financial proceedings are excluded. a. Public wobble payments, like social pledge or cash welfare benefits. b. Private tape drive payments, like student adjustments or alimony payments. c. The sale of stocks and bonds represent a manoeuvre of existing assets. (However, the brokers’ fees are include for run rendered. ) 3. Secondhand sales are excluded; they do not represent current end product. (However, each value added between grease ones palms and resale is included, e. g. , used car dealers. ) C. Two slipway to Look at GDP: Spending and Income. 1.What is played out on a product is income to those who helped to produce and dish out it. 2. This is an important identity and the foundation of the national accounting motion. D. Expenditures Approach (See Figure 7. 1 and Table 7. 3. ) 1. GDP is divided into the categories of demoraliseers in the merchandise; household consumers, businesses, government, and strange bu yers. 2. ain breathing in Expendituresâ€(C)â€includes durable goods (goods lasting 3 years or more(prenominal)(prenominal)), nondurable goods, and receiptss. 3. Gross Private domestic Investmentâ€(Ig) a. whole last-place obtains of machinery, equipment, and tools by businesses. . All bend (including residential). c. Changes in business inventory. i. If amount turnout exceeds current sales, inventories build up. ii. If businesses are able to look at more than they currently produce, this launch will be a damaging number. d. lolly Private municipal Investmentâ€(In). i. Each year as current output is world produced, existing keen equipment is vesture out and buildings are deteriorating; this is called depreciation or drug addiction of fixed outstanding. ii. Gross Investment negatively charged depreciation (consumption of fixed cap) is called substantiate investment. iii.If more new structures and capital equipment are produced in a given year than are used up, the productive cognitive content of the preservation will expand. (Figure 7. 2) iv. When gross investment and depreciation are equal, a nation’s productive capacity is static. v. When gross investment is slight than depreciation, an miserliness’s drudgery capacity declivitys. vi. CONSIDER THIS … Stock Answers intimately Flows 4. governance Purchases (of consumption goods and capital goods) †(G) a. Includes spend by all levels of government (federal, state, and local). b.Includes all direct purchases of imaginations (labor in particular). c. This entry excludes transfer payments since these outlays do not bounce current labor. 5. boodle Exports†(Xn) a. All spending on final goods produced in the U. S. essential be included in GDP, whether the purchase is made here or abroad. b. Often goods purchased and measured in the U. S. are produced elsewhere (Imports). c. Therefore, lettuce exports, (Xn) is the difference: (exports minus imports) and can be either a positive or negative number depending on which is the larger amount. 6. Summary: GDP = C + Ig + G + Xn E.Income Approach to GDP (See Table 7. 3): Demonstrates how the expenditures on final products are allocated to resource suppliers. 1. wages of employees includes wages, salaries, fringe benefits, salary and supplements, and payments made on behalf of workers like social security and other health and pension plans. 2. Rents: payments for supplying property resources (adjusted for depreciation it is cabbage rent). 3. entertain: payments from cloistered business to suppliers of money capital. 4. Proprietors’ income: income of merged businesses, sole proprietorships, partnerships, and cooperatives. . integrated net income: After in corporald income taxes are paid to government, dividends are distributed to the shareholders, and the remainder is leave as undistributed incorporate profits. 6. The sum of the preceding(prenominal) entries e quals national income: all income describe by the Statesn-supplied resources, whether here or abroad. 7. make upments requisite to balance both sides of the account: a. Indirect business taxes: general sales taxes, itch taxes, business property taxes, license fees and customs duties (the marketer treats these taxes as a salute of takings). . Depreciation/ inlet of Fixed Capital: The firm as intimately regards the decline of its capital stock as a cost of return. The depreciation fitting is set aside to change the machinery and equipment used up. In addition to the depreciation of personal capital, public capital (government buildings, port facilities, etc. ), mustinessiness be included in this entry. c. Net irrelevant factor income: National income measures the income of Americans both here and abroad. GDP measures the output of the geographical U. S. regardless of the nationality of the contributors.To create this final adjustment, the income of unusual nationals must be added and American income make abroad must be subtracted. Sometimes this entry is a negative number. (Without this adjustment you have GNP. ) III. Other National Accounts (see Table 7. 4) A. Net domestic product (NDP) is equal to GDP minus depreciation allowance (consumption of fixed capital). B. National income (NI) is income realise by American-owned resources here or abroad. Adjust NDP by subtracting indirect business taxes and adding net American income earned abroad. Note: This may be a negative number if foreigners earned more in U. S. than American resources earned abroad. ) C. personal income (PI) is income received by households. To calculate, take NI minus payroll taxes (social security contributions), minus corporate profits taxes, minus undistributed corporate profits, and add transfer payments. D. Disposable income (DI) is personal income less personal taxes. IV. orbitual Flow Revisited (see Figure 7. 3) A. Compare to the simpler model presented in earlier chapters. Now both government and foreign trade sectors are added.B. Note that the inside covers of the text contain a useful historical abstract of national income accounts and related statistics. V. nominal phrase versus tangible GDP A. Nominal GDP is the market value of all final goods and services produced in a year. 1. GDP is a (P x Q) figure including every item produced in the scrimping. Money is the common denominator that allows us to sum the total output. 2. To measure changes in the quantity of output, we have a yardstick that stays the homogeneous size. To make comparisons of length, a yard must remain 36 inches.To make comparisons of real output, a dollar sign must keep the same purchasing power. 3. Nominal GDP is deliberate using the current outlays prevailing when the output was produced, but real GDP is a figure that has been adjusted for expense level changes. B. The adjustment process in a one-good deliverance (Table 7. 5). Valid comparisons cannot be m ade with nominal GDP alone, since both impairments and quantities are subject to change. Some rule to separate the dickens military forces must be devised. 1. One method is to first memorize a price index, (see equation 1) and thus adjust the nominal GDP figures by dividing y the price index (in hundredths) (see differentiate 2). 2. An utility(a) method is to gather separate data on the quantity of animal(prenominal) output and determine what it would look at for in the bandstand year. The result is Real GDP. The price index is implied in the ratio: Nominal GDP/Real GDP. Multiply by deoxycytidine monophosphate to put it in standard index form (see Equation 3). C. Real World Considerations and Data 1. The actual GDP price index in the U. S. is called the chain-type annual- pitchs price index, and is more complex than can be illustrated here. 2.Once nominal GDP and the GDP price index are established, the relationship between them and real GDP is clear (see Table 7. 7). 3. The base year price index is eer one hundred, since Nominal GDP and Real GDP use the same prices. Because the long-term trend has been for prices to rise, adjusting Nominal GDP to Real GDP involves inflating the lower prices before the base year and deflating the higher prices after the base year. 4. Real GDP values allow more direct comparison of physical output from one year to the next, because a â€Å"constant dollar” measuring braid has been used. The purchasing power of the dollar has been standardized at the base-year level. ) VI. Shortcomings of GDP A. GDP doesn’t measure or so very useful output because it is unpaid (homemakers’ services, enate child care, volunteer efforts, home improvement projects). B. GDP doesn’t measure improvements in product feel or make allowances for amplifyd leisure time. C. GDP doesn’t measure improved living conditions as a result of more leisure. D. GDP makes no value adjustments for changes in the composition of output or the distribution of income. . Nominal GDP simply adds the dollar value of what is produced; it makes no difference if the product is a semi motorcarmatic rifle or a swing of baby food. 2. Per capita GDP may give somewhat hint as to the relative standard of living in the preservation; but GDP figures do not provide information about how the income is distributed. E. The undercover Economy 1. Illegal activities are not counted in GDP (estimated to be around 8% of U. S. GDP). 2. court-ordered economic activity may alike be part of the â€Å"underground,” usually in an effort to avoid taxation. F.GDP and the environment 1. The harmful effects of pollution are not deducted from GDP (oil spills, increased incidence of malignant neoplastic disease, wipeout of habitat for wildlife, the loss of a clear open view). 2. GDP does include payments made for cleaning up oil spills and the cost of health care for cancer victims. G. Noneconomic Sources of well -being like courtesy, crime reduction, etc. , are not covered in GDP. VII. LAST playscript: Feeding the GDP Accounts A. GDP is compiled by the representation of Economic digest (BEA) in the U. S. Commerce Department.Where does it get its data? Explanation follows. B. Consumption data comes from 1. nose count role’s â€Å"Retain Trade sketch” from a sample of 22,000 firms. 2. census Bureau’s â€Å"Survey of Manufacturers,” which gets information on consumer goods shipments from 50,000 firms. 3. count Bureau’s â€Å"Service Survey” of 30,000 service businesses. 4. attention trade sources like auto and aircraft sales. C. Investment data comes from 1. All the consumption sources listed above. 2. Census construction surveys. D. establishment purchase data is mystifyed from 1. U. S.Office of Personnel guidance, which collects data on wages and benefits. 2. Census construction surveys of public projects. 3. Census Bureau’s â€Å" Survey of Government Finance. ” E. Net export information comes from 1. U. S. customs Service data on exports and imports. 2. BEA surveys on service exports and imports. ANSWERS TO END-OF-CHAPTER QUESTIONS 7-1In what ways are national income statistics useful? National income accounting does for the economy as a whole what head-to-head accounting does for businesses. Firms measure income and expenditures to pass judgment their economic health.The national income accounting system measures the level of production in the economy at some particular time and helps explain the significance at that level. By comparing national accounts over a number of years, we can run the long-run course of the economy. Information supplied by national accounts provide a basis for designing and applying public policies to improve the performance of the economy. Without national accounts, economic policy would be guesswork. National income accounting allows us to assess the health of an econo my and formulate policies to maintain and improve that health. -2Explain why an economy’s output is also its income? Everything that is produced is sold, even if the â€Å" addressing,” in the case of inventory, is to the producing firm itself. Since the same amount of money paid out by the buyers of the economy’s output is received by the sellers as income (looking only at a unavowed-sector economy at this point), â€Å"an economy’s output is also its income. ” 3. (Key Question) Why do national income accountants include only final goods in measuring GDP for a particular year? Why fag out’t they include the value of stocks and bonds sold?Why don’t they include the value of used piece of furniture bought and sold? The dollar value of final goods includes the dollar value of intermediate goods. If intermediate goods were counted, then multiple counting would occur. The value of steel (an intermediate good) used in autos is included in the price of the auto (a final product). This value is not included in GDP because such sales and purchases simply transfer the ownership of existing assets; such sales and purchases are not themselves (economic) investment and thus should not be counted as production of final goods and services.Used furniture was produced in some forward year; it was counted as GDP then. Its resale does not measure new production. 7-4What is the difference between gross private domestic investment and net private domestic investment? If you were to determine net domestic product (NDP) through the expenditures approach, which of these two measures of investment spending would be appropriate? Explain. Gross private domestic investment less depreciation is net private domestic investment. Depreciation is the value of all the physical capitalâ€machines, quipment, buildingsâ€used up in producing the year’s output. Since net domestic product is gross domestic product less depreciation, in determining net domestic product through the expenditures approach it would be appropriate to use the net investment measure that excludes depreciation, that is, net private domestic investment. 7-5Why are changes in inventories included as part of investment spending? Suppose inventories declined by $1 one thousand trillion during 2003. How would this alter the size of gross private domestic investment and gross domestic product in 2003? Explain.Anything produced by business that has not been sold during the accounting period is something in which business has investedâ€even if the â€Å"investment” is involuntary, as often is the case with inventories. exclusively all inventories in the hands of business are expected eventually to be used by businessâ€for instance, a pile of bricks for extending a grinder buildingâ€or to be soldâ€for instance, a can of beans on the supermarket shelf. In the hands of business both the bricks and the beans are equally asse ts to the business, something in which the business has invested.If inventories declined by $1 million in 2003, $1 million would be subtracted from both gross private domestic investment and gross domestic product. A decline in inventories indicates that goods produced in a previous year have been used up in this year’s production. If $1 billion is not subtracted as stated, then $1 billion of goods produced in a previous year would be counted as having been produced in 2003, leading to an overstatement of 2003’s production. 7-6Use the concepts of gross and net investment to distinguish between an economy that has a rising stock of capital and one that has a falling stock of capital. In 1933 net private domestic investment was minus $6 billion. This heart and soul in that particular year the economy produced no capital goods at all. ” Do you train? Why or why not? Explain: â€Å"Though net investment can be positive, negative, or zero, it is quite impossible for gross investment to be less than zero. ” When gross investment exceeds depreciation, net investment is positive and production capacity expands; the economy ends the year with more physical capital than it started with.When gross investment equals depreciation, net investment is zero and production capacity is said to be static; the economy ends the year with the same amount of physical capital. When depreciation exceeds gross investment, net investment is negative and production capacity declines; the economy ends the year with less physical capital. The first statement in wrong. Just because net investment was a minus $6 billion in 1933 does not mean the economy produced no new capital goods in that year. It simply means depreciation exceeded gross investment by $6 billion.So the economy ended the year with $6 billion less capital. The second statement is correct. If only one $20 nigger is bought by a construction firm in the entire economy in a year and no other physic al capital is bought, then gross investment is $20â€a positive amount. This is true even if net investment is highly negative because depreciation is well above $20. If not even this $20 spade has been bought, then gross investment would have been zero. moreover gross investment can never be less than zero. 7-7Define net exports.Explain how the United States’ exports and imports each affect domestic production. Suppose foreigners spend $7 billion on American exports in a given year and Americans spend $5 billion on imports from abroad in the same year. What is the amount of America’s net exports? Explain how net exports dexterity be a negative amount. Net exports are a country’s exports of goods and services less its imports of goods and services. The United States’ exports are as much a part of the nation’s production as are the expenditures of its own consumers on goods and services made in the United States.Therefore, the United States†™ exports must be counted as part of GDP. On the other hand, imports, being produced in foreign countries, are part of those countries’ GDPs. When Americans buy imports, these expenditures must be subtracted from the United States’ GDP, for these expenditures are not made on the United States’ production. If American exports are $7 billion and imports are $5 billion, then American net exports are +$2 billion. If the figures are reversed, so that Americans export $5 billion and import $7 billion, then net exports are -$2 billionâ€a negative amount.For this to come about, Americans must either decrease their holdings of foreign currencies by $2 billion, or borrow $2 billion from foreignersâ€or do a bit of both. (Another option is to sell back to foreigners some of the previous American investments abroad. ) 7-8(Key Question) to a lower place is a list of domestic output and national income figures for a given year. All figures are in billions. The questio ns that follow ask you to determine the major national income measures by both the expenditure and income methods. The results you obtain with the antithetic methods should be the same. | | | individualised consumption expenditures |$245 | |Net foreign factor income earned |4 | |Transfer payments |12 | |Rents |14 | |Consumption of fixed capital (depreciation) |27 | |Social security contributions |20 | |Interest |13 | |Proprietors’ income |33 | |Net exports |11 | |Dividends |16 | |Compensation of employees |223 | |Indirect business taxes |18 | |Undistributed corporate profits |21 | |Personal taxes |26 | |Corporate income taxes |19 | |Corporate profits |56 | |Government purchases |72 | |Net private domestic investment 33 | |Personal saving |20 | | | | a. use the above data, determine GDP by both the expenditure and the income approaches. Then determine NDP. b. Now determine NI: first, by making the required additions and subtractions from GDP; and second, by adding up the types of income that make up NI. c. Adjust NI (from part b) as required to obtain PI. d. Adjust PI (from part c) as required to obtain DI. (a)GDP = $388, NDP = $361 (b)NI = $339 (c)PI = $291 (d)DI = $265 7-9Using the following national income accounting data, write in code (a) GDP, (b) NDP, (c) NI. All figures are in billions. | | |Compensation of employees |$194. 2 | |U. S. exports of goods and services |17. 8 | |Consumption of fixed capital (depreciation) |11. 8 | |Government purchases |59. 4 | |Indirect business taxes |14. | |Net private domestic investment |52. 1 | |Transfer payments |13. 9 | |U. S. imports of goods and services |16. 5 | |Personal taxes |40. 5 | |Net foreign factor income earned in U. S. |2. 2 | |Personal consumption expenditures |219. | | | | |(a) Personal consumption expenditures (C) |$219. 1 | | Government purchases (G) |59. 4 | | Gross private domestic investment (Ig) |63. 9 | | (52. 1 + 11. 8) | | | Net exports (Xn) (17. 8 †16. 5) | 1. 3 | | Gross domestic product (GDP) |$343. | | | | |(b) Consumption of fixed capital | -11. 8 | | Net domestic product (NDP) |$331. 9 | | | | |(c) Net foreign factor income earned in U. S. |-2. 2 | | Indirect business taxes | -14. 4 | | National income (NI) |$315. 3 | -10Why do national income accountants compare the market value of the total outputs in various years kinda than actual physical volumes of production? What occupation is constitute by any comparison over time of the market values of various total outputs? How is this problem resolved? If it is impossible to summarize oranges and apples as one statistic, as the ranking goes, it is surely even more impossible to add oranges and, say, computers. If the production of oranges increases by 100 part and that of computers by 10 pct, it does not make any sense to add the 100 percent to the 10 percent, then divide by 2 to get the average and say total production has increased by 55 percent.Since oranges and computers have contrasting values, the quantities of each commodity are multiplied by their values or prices. Adding together all the results of the price times quantity figures leads to the aggregate figure video display the total value of all the final goods and services produced in the economy. Thus, to return to oranges and computers, if the value of orange production increases by 100 percent from $100 million to $200 million, while that of computers increases 10 percent from $2 billion to $2. 2 billion, we can see that total production has increased from $2. 1 billion (= $100 million + $2 billion) to $2. 4 billion (= $200 million + $2. 2 billion).This is an increase of 14. 29 percent [= ($2. 4 billion †$2. 1 billion)/$2. 1 billion)]â€and not the 55 percent incorrectly derived earlier. Comparing market values over time has the disadvantage that prices change. If the market value in year 2 is 10 percent greater than in year 1, we cannot say the economy’s production has increase d 10 percent. It depends on what has been happening to prices; on whether the economy has been experiencing splashiness or deflation. To resolve this problem, statisticians deflate (in the case of inflation) or inflate (in the case of deflation) the value figures for the total output so that only â€Å"real” changes in production are recorded.To do this, each item is appoint a â€Å"weight” corresponding to its relative vastness in the economy. Housing, for example, is given a high weight because of its importance in the average budget. A phonograph record of matches would be given a very low weight. Thus, the price of housing increasing by 5 percent has a much greater effect on the price index used to compare prices from one year to the next, than would the price of a sacred scripture of matches increasing by 100 percent. 7-11(Key Question) Suppose that in 1984 the total output in a single-good economy was 7,000 positions of chicken. Also suppose that in 1984 ea ch bucket of chicken was priced at $10. Finally, assume that in 1996 the price per bucket of chicken was $16 and that 22,000 buckets were purchased.Determine the GDP price index for 1984, using 1996 as the base year. By what percentage did the price level, as measured by this index, rise between 1984 and 1996? Use the two methods listed in Table 7-6 to determine real GDP for 1984 and 1996. X/100 = $10/$16 = . 625 or 62. 5 when put in percentage or index form (. 625 x 100) [pic] or 60%(Easily calculated [pic]) Method 1:1996 = (22,000 x $16) ? 1. 0 = $352,000 1984 = (7,000 x $10) ? .625 = $112,000 Method 2:1996 = 22,000 x $16 = $352,000 1984 = 7,000 x $16 = $112,000 12. (Key Question) The following table shows nominal GDP and an appropriate price index for a root word of selected years. Compute real GDP.Indicate in each advisement whether you are inflating or deflating the nominal GDP data. | | | | | | |Nominal GDP, |Price index |Real GDP, | |Year |Billions |(1996 = 100) |Billions | | | | | | | | | | | |1960 |$527. 4 | |22. 9 | |$ ______ | |1968 |911. 5 | |26. 29 | |$ ______ | |1978 |2295. 9 | |48. 22 | |$ ______ | |1988 |4742. 5 | |80. 22 | |$ ______ | |1998 |8790. 2 | |103. 22 | |$ ______ | | | | | | set for real GDP, top to bottom of the column: $2,376. 7 (inflating); $3,467. (inflating); $4,761. 3 (inflating); $5,911. 9 (inflating); $8,516 (deflating). 7-13Which of the following are actually included in this year’s GDP? Explain your answer in each case. a. Interest on an AT&T bond. b. Social security payments received by a retired factory worker. c. The services of a family member in painting the family home. d. The income of a dentist. e. The money received by Smith when she sells her economics textual matter to a book buyer. f. The monthly allowance a college student receives from home. g. Rent received on a two-bedroom apartment. h. The money received by cod when he resells his current-year-model Honda automobile to Kim. i.Interest receiv ed on corporate bonds. j. A 2-hour decrease in the length of the workweek. k. The purchase of an AT&T corporate bond. l. A $2 billion increase in business inventories. m. The purchase of 100 shares of GM common stock. n. The purchase of an policy policy. (a)Included. Income received by the bondholder for the services derived by the weed for the loan of money. (b)Excluded. A transfer payment from taxpayers for which no service is rendered (in this year). (c)Excluded. Not a market transaction. If any payment is made, it will be within the family. (d)Included. defrayment for a final service. You cannot pass on a tooth extraction! (e)Excluded.Secondhand sales are not counted; the textbook is counted only when sold for the first time. (f)Excluded. A private transfer payment; simply a transfer of income from one private individual to another for which no transaction in the market occurs. (g)Included. Payment for the final service of housing. (h)Excluded. The production of the car ha d already been counted at the time of the initial sale. (i)Included. The income received by the bondholders is paid by the corporations for the current use of the â€Å"money capital” (the loan). (j)Excluded. The effect of the decline will be counted, but the change in the workweek itself is not the production of a final good or service or a payment for work done. (k) Excluded.A noninvestment transaction; it is merely the transfer of ownership of financial assets. (If AT&T uses the money from the sale of a new bond to carry out an investment in real physical assets that will be counted. ) (l)Included. The increase in inventories could only occur as a result of increased production. (m)Excluded. Merely the transfer of ownership of existing financial assets. (n)Included. Insurance is a final service. If bought by a household, it will be shown as consumption; if bought by a business, as investmentâ€as a cost added to its real investment in physical capital. 7-14(Last Wor d) What government agency compiles the U. S. genus Nipa tables? In what U. S. epartment is it located? Of the several specific sources of information, shout out one source for each of the four components of GDP: consumption, investment, government purchases, and net exports. The Bureau of Economic Analysis (BEA) in the Department of Commerce compiles GDP statistics. The Census Bureau provides survey data for consumption, investment, and government purchases. Consumption figures also come from industry trade sources as does some investment data. The U. S. Office of Personnel Management also provides data on government spending on services. Net export figures come from the U. S. Customs Service and BEA surveys on service exports and imports.\r\n'