1. Why does inflation make nominal GDP a poor measure of the increase in total production? 2. Which component of GDP will be affected by each of the following transactions involving FlyCheap Airlines? Briefly explain. Hint: GDP = C + I + G + Nx i. You purchase a ticket on a FlyCheap Airlines to visit your niece. ii. FlyCheap Airlines purchases a new jetliner from Boeing. iii. FlyCheap Airlines purchases new seats to be installed on a jetliner it already owns. iv. FlyCheap Airlines purchases 200 million gallons of fuel. v. A French citizen purchases a ticket to fly on a FlyCheap flight from Paris to New York. vi. The city of Nashville agrees to spend funds to extend one of the runways so that FlyCheap will be able to land larger jets

Economics homework help


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