Assignment:
1. Which of the following would be considered a final good in the calculation of U.S. GDP? Explain your answers.
a. Processors manufactured in California for Apple's new range of laptops (that will be sold in the United States)
b. Foot massages at spas in California
c. Predator drones purchased by the federal government
2. Nobel laureate Simon Kuznets, who did significant work on national income accounts in the 1930s, said that the welfare of a nation can scarcely be inferred from a measurement of national income. Would you agree with him? Why or why not?
3. Suppose there are only two small countries in the world: Ascot, with a population of 30,000 people, and Delwich, with a population of 20,000 people. Ascot's GDP is equal to $150 million, while Delwich's GDP is $250 million. Delwich's GNP has been estimated to be equal to $280 million. Use this information to calculate Ascot's GNP, the GDP per capita in Ascot, and the GNP per capita in Delwich.