Which of the components of GDP are effected when Lauren buys a computer made in

Question

Which of the components of GDP are effected when Lauren buys a computer made in Taiwan for her small business? Explain. Which of the components of GDP are affected when a new police officer is being hired? Explain. Which of the following is going to have greater effect on the inflation rate, 10% increase in college tuition or 10% increase in the housing cost? Explain. Bernie lost his job 2 month ago. He is looking for an engineering job and meanwhile supports his family by working for a cab company 5 hours a week. Is Bernie considered to be employed, unemployed, or not in the labor force? Explain. Give an example of a situation in which a person would be considered frictionally unemployed.

Explanation / Answer

GDP=C+I+G+(Ex-Im)

a. Import component will be effected by importing a computer from Taiwan. In other words, net exports i.e. exports-imports decreases.

b. Government expenditure increases. Because salaries of public servants are paid by government.

c. 10% increase in housing cost would have more impact because all the citizens of a nation avail housing facility either by lease or buying. Comparitively lesser number of people are into education.

d. Bernie is considered to be unemployed because he is search of a job which matches his skills.

e. Above said example is of frictional unemployment. "Frictional unemployment is always present to some degree in an economy. It occurs when there is a mismatch between the workers and jobs. The mismatch can be related to skills, payment, work time, location, seasonal industries, attitude, taste, and other factors. Frictional unemployment is influenced by voluntary decisions."

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