Calculate GDP using the Income and Expenditure Approach. (b) (all figures are in billions of dollars): Item Amount ($) Government purchase of goods and services 1,721.6 Exports 1,096.3 Receipts of factor income from the rest of the world 382.7 Depreciation (consumption of fixed capital
(a) Calculate
(b) (all figures are in billions of dollars):
|
Item |
Amount ($) |
|
Government purchase of goods and services |
1,721.6 |
|
Exports |
1,096.3 |
|
Receipts of factor income from the rest of the world |
382.7 |
|
|
990.8 |
|
Net fixed Investments |
688.2 |
|
Corporate income taxes |
265.2 |
|
Consumption expenditures |
6,739.4 |
|
Indirect business taxes |
664.6 |
|
Imports |
1,475.8 |
|
Payments of factor income to the rest of the world |
343.7 |
|
Inventory change |
56.5 |
|
Social security contributions |
702.7 |
|
Undistributed corporate profits ( |
130.3 |
|
Government transfer and interest payments |
1,366.3 |
|
Personal interest payments |
286.2 |
|
Personal taxes |
1,235.7 |
(c) Using the following data calculate:
(i) The number of persons employed.
(ii) The number of persons unemployed.
(iii) The labour force.
(iv) The Labour Force Participation rate.
(v) The “official”
|
987,156 Currently Working |
23,000 volunteer workers |
|
9845 (ages 13-14) looking for work |
12,000 (ages 15) looking for work |
|
45,600 Part-Time workers |
56 family workers who worked 15 hrs a week |
|
234 Self-Employed |
6543 Discouraged Workers |
|
67,432 (ages 23-25) looking for work |
67,890 laid off receptionists looking for work |
|
544,321 (ages 16-20) looking for work |
Current population is 6,000,000 |
|
5654 Temp Workers |
5000 armed forces |
|
543 recent university graduates that are going back to graduate school |
3500 institutionalized |
(d) Suppose that 20,000 of the employed switches to jobs in the underground economy. When interviewed by STATIN, 50% of these switchers report that they are not working and not seeking work, while the other 50% report that they are not working but seeking work. Explain what happens to the official unemployment rate and the “true” unemployment rate.
(e) Illustrate and carefully explain the impact of an increase in the income tax rate from 25 percent to 35 percent on the demand for labour, supply of labour, equilibrium wage and level of employment.
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