1. Would it be possible for an increase in taxation to decrease the gross domestic product measured in the U.S.? Why or why not?

2.   Adam’s Ribs in downtown Chicago buys $10,000 worth of beef ribs, $25,000 worth of pork ribs, and $8,000 worth of napkins each month. Are these purchases included in the calculation of gross domestic product? Explain your answer.

3.         Using the expenditure approach, calculate GDP using the following data.

Item

Amount in dollars (billions)

Total Consumption

9,600

Consumption of Durable Goods

1,600

Consumption of Non Durable Goods

2,800

Consumption of Services

3,200

Total Investment

3,750

Fixed Investment

1,000

Government purchases of Goods & Services

2,675

Government Transfer Payments

450

Exports

800

Imports

900

GDP Equals=

4.   (a) What is the importance of measuring per capita GDP?

(b) How do pollution and crime affect GDP?

5.       What is the underground economy? How does it affect GDP calculations? Provide three examples of  underground economy transactions.