Relating the transactions with the components of GDP and elucidate the situation with the CPI bias.
1. What components of GDP (if any) would each of the following transactions affect? Explain.
a.Family buys a new refrigerator.
b.Aunt Jane buys a new house
c.Ford sells a Mustang
d.You buy a pizza
e.California repaves Highway 101
f.Your parents buy a bottle of French wine
g.Honda expands it factory in Marysville, Ohio
2. Which of the problems in the construction of the CPI might be illustrated be each of the following situations? Explain.
a.the invention of the Sony Walkman
b.the introduction of air bags in cars
c.increased personal computer purchases in response to decline in their price
d.more scoops of raisins in each package of Raisin Bran
e.greater use of fuel-efficient cars after gasoline prices increase