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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