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1. When calculating gross
expenditure by:
a. subtracting exports and adding back imports.
b. adding in net income earned from foreign sources, plus the trade balance, plus net unilateral
transfers from abroad.
c. subtracting
d. taking out net factor income from abroad and subtracting net unilateral transfers.
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Solved in 3 steps
- Scenario 5.1Suppose that personal income is $250 billion. Furthermore, assume that retained corporate earnings are $2 billion, social security taxes are $15 billion, social security benefit checks equal $16 billion, the capital consumption allowance is $32 billion, and corporate taxes amount to $40 billion. Refer to Scenario 5.1. What will be the value of net national product in this country?Please solve using a national income accounting That tax increases (with no change in transfer payments) will change net exports, government spending and the saving-investment balanceFor this problem, assume exports equal zero and that firms did not purchase any plant or equipment in the years specified. Suppose in the year 2015, firms in this this country produced 4,000 million widgets, all of which they planned on selling. (In other words, firms were not planning on any changes to their inventories.) Of those 4,000 million widgets, households purchased 3,000 million, and government purchased 750 million. In 2015, what were firm’s planned investments equal to? In 2015, what were firm’s actual investments equal to? (explain). In 2015, what was the relationship between planned expenditures and actual expenditures? (Explain and use numbers) In 2015, what was the relationship between actual expenditures and the amount of output (widgets) produced? All else equal, what will firms likely do in the following year?
- Consider the following data (in billion $) for a country in a particular year: (assume this country has Zero Transfer Payment Personal consumption expenditure (C) 200 Exports (x) 10 Government Purchases of goods and services (G) 120 Imports (m) 15 Gross Domestic Product (Y) 1800 Taxes 20 d. What is the value of gross investment? e. What is the value of net export? f. Is the country lending to or borrowing from rest of the world? g. Dose the government has deficit, balance or surplus budget? h. What is the amount of investment financed by national saving? i. What is the amount of investment financed by borrowing from rest of the world? J. What is the meaning of transfer payment8 Which of the following is true about Net Domestic Product? a. GDP deducted with depreciation b. GDP added with net factor income c. GNP added with net factor income d. GNP deducted with depreciationQ1) From the following table ,National income, Personal income and Disposable personal income In millions of dollars __________________________________________ Transfer payments1500 Subsidies 500 Social insurance payments3500 Depreciation 5000 Receipts of factor income from the rest of the world 400 Government consumption and investment7500 Imports 5000 Payments of factor income to the rest of the world 500 Personal interest income from government and households3500 Indirect taxes2000 Exports6000 Net private domestic investment 10000 Personal taxes6000 Corporate profits4500 Personal consumption expenditures 25000 Dividends 400
- ADVANCED ANALYSIS Assume that the consumption schedule for a mixed open economy is such that consumption is: C = 250 + 0.8Yd Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at Ig = 50 and Xn = 30. Lastly, assume government spending G = 40 and taxes T = 40. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y = C + Ig + G + Xn Given that taxes T are present, the consumption schedule can be rewritten as: C = 250 + 0.8(Y - T) Instructions: Enter your answers as whole numbers.a. Calculate the equilibrium level of income or real GDP for this economy. Equilibrium GDP (Y) = $ . b. What happens to equilibrium GDP if Xn changes to 40? Equilibrium GDP (Y) = $ . What does this outcome reveal about the size of the spending multiplier? Spending multiplier = .QUESTION 14For an open economy, which of the following expressions represents private saving (S)? investment plus tax revenues less government expenditure plus net exports, I + T – G + NXI + T – G – NXI + G + NXG – T + NX – In one of the aboveThe following data relates to the economy of a country over a one-year period. K’B Subsidies ………………………………………… 1 000 Gross domestic fixed capital formation……………. 2 400 Exports of goods and services ……………………. 2 000 Government final consumption ……………………. 3 000 Property income from abroad …………………… 300 Imports of goods and services ……………………. 2 500 Value of physical decrease in stocks …………… 10 Consumer’s expenditure ……………………. 8 000 Capital consumption/Depreciation ………………… 1 500 Taxes on expenditure……………………………... 1 750 Property income paid abroad ……………………. 500 Required Calculate the following from the above data: (a) Gross domestic product at market prices (b) Gross domestic product at factor cost (c) Gross national product at factor cost (d) Net national product at factor cost
- Suppose GDP is $16 trillion, with $10 trillion coming from consumption, $2 trillion coming from gross investment, $3.5 trillion coming from government expenditures, and $500 billion coming from net exports. Also suppose that across the whole economy, depreciation (consumption of fixed capital) totals $1 trillion. From these figures, we see that net domestic product equals: a. $17.0 trillion. b. $16.0 trillion. c. $15.5 trillion. d. None of the above.2. Net exports are best defined as a. The difference between total exports and total imports b. Net Imports – Net Exports c. Economic output from a given year that is not consumed d. Y = C + I + G - NX e. None of the aboveA large open economy has desired national saving of Sd = 1200 + 1000rw, and desired national investment of Id = 1000 - 500rw. The foreign economy has desired national saving of = 1300 + 1000rw, and desired national investment of = 1800 - 500rw. Suppose the foreign country's government increases its spending by 300 and private saving does not change. Then in equilibrium, the foreign country has net exports equal to____
