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The U.S. Dollar Value Of The Television In Mexico Discussion Paper
Question
A television in Mexico costs 3,200 Mexican pesos. If the dollar price of the Mexican peso is $0.11, then the U.S. dollar value of the same television is $352.

a. True

b. False

Productive activity in the underground economy

a. Results in an overstatement of actual income and production in the national accounting system. The U.S. Dollar Value Of The Television In Mexico Discussion Paper
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b. Consists of unrecorded cash transactions.

c. Is fully estimated and included in the national income accounting system.

d. Poses no problem for the measurement of gross domestic product.

e. Does not affect GDP, but is included in the value-added computations.

Which of the following would be included in the Financial Account of the Balance of Payments?

a. Interest earned by a U.S. bank on a foreign loan.

b. U.S. humanitarian aid for victims of war in Bosnia.

c. Income received by a U.S. firm from a sale abroad.

d. A loan received by the U.S. government from abroad.

e. The purchase of a German car by an American in the U.S.

The GDP Gap is equal to Actual Real GDP – Potential Real GDP.

a. True b. False The U.S. Dollar Value Of The Television In Mexico Discussion Paper
Step-by-step

Answer1:- (a) True. To convert the price of the television in Mexican pesos to U.S. dollars,
we need to multiply the price in pesos by the exchange rate of Mexican pesos to U.S. dollars. 3,200 Mexican pesos × $0.11 per Mexican peso = $352

Explanation for step 1

Therefore, the U.S. dollar value of the television in Mexico is $352.

Step 2/4

Answer2:- Option (a)
Productive activity in the underground economy, also known as the informal economy or shadow economy, refers to economic activities that are not registered or reported to the government for tax purposes. These activities are often based on unrecorded cash transactions, making it difficult for national accounting systems to measure the true extent of economic activity The U.S. Dollar Value Of The Television In Mexico Discussion Paper.

Explanation for step 2

Since these economic activities are not reported to the government, they are not included in the official calculation of gross domestic product (GDP). This can result in an overstatement of actual income and production in the national accounting system, as GDP only measures economic activities that are recorded and reported to the government. Therefore, option (a) is the correct answer.

Step 3/4

Answer3:-

The Financial Account of the Balance of Payments records the flow of financial assets between a country and the rest of the world. Among the options provided, the items that would be included in the Financial Account are: (a) Interest earned by a U.S. bank on a foreign loan: This is an example of a financial investment in which a foreign entity is paying interest to a U.S. bank, so it would be included in the Financial Account. (c) Income received by a U.S. firm from a sale abroad: This is an example of a financial transaction that represents the receipt of funds by a U.S. entity from abroad, so it would also be included in the Financial Account. (d) A loan received by the U.S. government from abroad: This is another example of a financial transaction involving the inflow of funds from abroad, so it would be included in the Financial Account. The U.S. Dollar Value Of The Television In Mexico Discussion Paper

Explanation for step 3

The items that would not be included in the Financial Account are: (b) U.S. humanitarian aid for victims of war in Bosnia: This is an example of a transfer payment, which represents a gift or a grant from one country to another, and is not considered a financial transaction. Therefore, it would not be included in the Financial Account. (e) The purchase of a German car by an American in the U.S.: This is an example of a transaction involving the exchange of a physical good, which is not a financial transaction. Therefore, it would not be included in the Financial Account.
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Step 4/4

Answer4:- Option (a) True. The GDP Gap is defined as the difference between Actual Real GDP (the actual output of an economy) and Potential Real GDP (the maximum output an economy can produce with its existing resources and technology).

Explanation for step 4

Therefore, the formula for GDP Gap is: GDP Gap = Actual Real GDP - Potential Real GDP.

Final answer

Answer of all the questions provided above with full explanations. The U.S. Dollar Value Of The Television In Mexico Discussion Paper

Expert Answer

The U.S. Dollar Value Of The Television In Mexico Discussion Paper

Question

A television in Mexico costs 3,200 Mexican pesos. If the dollar price of the Mexican peso is $0.11, then the U.S. dollar value of the same television is $352. a. True b. False Productive activity in the underground economy a. Results in an overstatement of actual income and production in the national accounting system. The U.S. Dollar Value Of The Television In Mexico Discussion Paper

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b. Consists of unrecorded cash transactions. c. Is fully estimated and included in the national income accounting system. d. Poses no problem for the measurement of gross domestic product. e. Does not affect GDP, but is included in the value-added computations. Which of the following would be included in the Financial Account of the Balance of Payments? a. Interest earned by a U.S. bank on a foreign loan. b. U.S. humanitarian aid for victims of war in Bosnia. c. Income received by a U.S. firm from a sale abroad. d. A loan received by the U.S. government from abroad. e. The purchase of a German car by an American in the U.S. The GDP Gap is equal to Actual Real GDP – Potential Real GDP. a. True b. False The U.S. Dollar Value Of The Television In Mexico Discussion Paper

Step-by-step

Answer1:- (a) True. To convert the price of the television in Mexican pesos to U.S. dollars,

we need to multiply the price in pesos by the exchange rate of Mexican pesos to U.S. dollars. 3,200 Mexican pesos × $0.11 per Mexican peso = $352

Explanation for step 1

Therefore, the U.S. dollar value of the television in Mexico is $352.

Step 2/4

Answer2:- Option (a)

Productive activity in the underground economy, also known as the informal economy or shadow economy, refers to economic activities that are not registered or reported to the government for tax purposes. These activities are often based on unrecorded cash transactions, making it difficult for national accounting systems to measure the true extent of economic activity The U.S. Dollar Value Of The Television In Mexico Discussion Paper.

Explanation for step 2

Since these economic activities are not reported to the government, they are not included in the official calculation of gross domestic product (GDP). This can result in an overstatement of actual income and production in the national accounting system, as GDP only measures economic activities that are recorded and reported to the government. Therefore, option (a) is the correct answer.

Step 3/4

Answer3:-

The Financial Account of the Balance of Payments records the flow of financial assets between a country and the rest of the world. Among the options provided, the items that would be included in the Financial Account are: (a) Interest earned by a U.S. bank on a foreign loan: This is an example of a financial investment in which a foreign entity is paying interest to a U.S. bank, so it would be included in the Financial Account. (c) Income received by a U.S. firm from a sale abroad: This is an example of a financial transaction that represents the receipt of funds by a U.S. entity from abroad, so it would also be included in the Financial Account. (d) A loan received by the U.S. government from abroad: This is another example of a financial transaction involving the inflow of funds from abroad, so it would be included in the Financial Account. The U.S. Dollar Value Of The Television In Mexico Discussion Paper

Explanation for step 3

The items that would not be included in the Financial Account are: (b) U.S. humanitarian aid for victims of war in Bosnia: This is an example of a transfer payment, which represents a gift or a grant from one country to another, and is not considered a financial transaction. Therefore, it would not be included in the Financial Account. (e) The purchase of a German car by an American in the U.S.: This is an example of a transaction involving the exchange of a physical good, which is not a financial transaction. Therefore, it would not be included in the Financial Account.

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Step 4/4

Answer4:- Option (a) True. The GDP Gap is defined as the difference between Actual Real GDP (the actual output of an economy) and Potential Real GDP (the maximum output an economy can produce with its existing resources and technology).

Explanation for step 4

Therefore, the formula for GDP Gap is: GDP Gap = Actual Real GDP - Potential Real GDP.

Final answer

Answer of all the questions provided above with full explanations. The U.S. Dollar Value Of The Television In Mexico Discussion Paper

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