NEWEcon1103-008 - Final Answers - Students - W21(1)
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Jan 9, 2024
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Department of Economics, Justice, and Policy Studies
4825 Mount Royal Gate SW, Calgary, AB, Canada T3E 6K6
_________________________________________________________________________
ECON 1103-008
Principles of Macroeconomics
Final Exam Answers
Instructors: Dr. David R. Sabiston
Winter 2021
__________________________________________________________________________________
__
1
Student Name:
Aqusa Butt Student ID#: __201693643__ __________________________________________________________________________________
__
1
1
PART A:
Multiple Choice Questions (45 questions @ 1 mark each = 45 marks)
Select the BEST
answer from each of the test questions and record it the
following table: 1. A
6. B
11. A
16. A
21. B
26. B
31. D
36. B
41. B
2. A
7. D
12. C
17. D
22. D
27. A
32. A
37. C
42. D
3. C
8. B
13. A
18. A
23. B
28. C
33. A
38. A
43. C
4. C
9. B
14. C
19. B
24. D
29. C
34. B
39. D
44. C
5. B
10. D
15. C
20. A
25. D
30. B
35. D
40. B
45. C
PART B:
Math, Graph and/or Applications Questions (3 questions @ 15 marks each = 45 marks)
Answer all parts of THREE
of the following FIVE questions SHOW ALL
YOUR WORK.
Please delete the two questions that you are NOT answering.
B1.
National Income Accounting
1Suppose you are given the following table with certain variables collected by Statistics Canada over a given year ($millions):
1. Capital consumption allowances
$195,229
2. Personal expenditure on consumer goods and services
$852,770
3. Personal income taxes
$267,360
4. Government business enterprise profits before taxes
$15,539
5. Gross Investment
$311,496
6. Taxes less subsidies on products
$99,428
7. Corporation profits before taxes
$203,231
8. Employment insurance benefits
$8,778
9. Government expenditure on goods and services
$342,198
10. Exports
$532,118
11. Inventory valuation adjustment
$3,272
12. Taxes less subsidies on factors of production
$67,921
13. Canada pension plan deductions
$76,505
14. Net income of non-farm unincorporated business, including rent
$90,363
15. Accrued net income of farm operators from farm production
$110
16. Imports
$502,255
17. Wages, salaries and supplementary labour income
$788,357
18. Transfer payments from federal government
$206,502
19. Interest and miscellaneous investment income
$71,515
(a) Calculate the Gross Domestic Product (GDP) using both the expenditure/output approach as well as the income approach. (
12 marks)
Hint:
(1) the “Statistical Discrepancy” for each approach is not given; hence the two values will differ & (2) do you really need all these categories?!
Expenditure/output approach:
2
Personal expenditure on consumer goods and services + Government expenditure
on goods and services + Gross Investment + Inventory valuation adjustment + (export- import)
= 852,770 + 342,198 + 311, 496 + 3,327 + (532,11 – 502, 255) = 1,539,599
GDPmp = 1,539,599
Income approach:
Wages, salaries, and supplementary labour income + Interest and miscellaneous investment income + Government business enterprise profits before taxes + Taxes less subsidies on factors of production + Corporation profits before taxes + Transfer payments from federal government + Net income of non-farm unincorporated business, including rent + Taxes less subsidies on products
= 788,357 + 71,515 + 15,539 + 67,921 + 203,231 + 206,502 + 903,63 + 110 + 195,229 + 99,428 = 1,738,195
GDPmp = 1,738,195
(b)
To calculate the statistical discrepancy values under each approach, Statistics Canada takes the difference between the two values calculated in part (a) and divides the difference in half. Based on this methodology, calculate the statistical discrepancy. (
1.5 marks
)
(GDP (at expenditure) = GDP (by income)) / 2
(1,539,599 + 1,738,195) / 2 = 1,638,897
c)
In order to get the identical value for GDP at market prices under both approaches, the statistical discrepancy is subtracted from the higher value and added to the lower value calculated in part (a). Based on this methodology, what was the final value of GDP at market prices? (
1.5 marks
)
output approach
:
statistical discrepancy – GDP
1,638,897 – 1,539,599
= 99, 298
Income approach:
Statistical discrepancy – GDP
1,638,897 – 1,738,195
= 99,298
There are dispensaries between the two approaches. 3
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