Textbooks , The Macroeconomy Today,S chiller, Bradley R., 14th edition. Calculat

Question

Textbooks ,The Macroeconomy Today,S chiller, Bradley R., 14th edition.

Calculate National Income from the following figures:

Consumption $400 billion

Depreciation 25 billion

Retained earnings 12 billion

Gross investment 40 billion

Imports 30 billion

Social Security taxes 25 billion

Exports 40 billion

Indirect business taxes 15 billion

Government purchases 50 billion

Personal income taxes 40 billion

Net Foreign Factor Income 20 billion

Calculate NI :

(ii) If there were 80 million people in this country, what would the GDP per capita be?

(iii) If all prices were to double overnight, what would happen to the values of real and nominal GDP per capita?

Real GDP: _______

Nominal GDP: _______

please no hand writing , or make your hand writing so easy to read

Explanation / Answer

(i)

Calculate National Income -

National income = Consumption + Gross investment + Government purchases + Exports - Imports - Depreciation - Indirect business taxes + Net foreign factor income

National income = $400 billion + $40 billion + $50 billion + $40 billion - $30 billion - $25 billion - $15 billion + $20 billion

National income = $480 billion

The national income is $480 billion.

(ii)

GDP = Consumption + Gross investment + Government purchases + Exports - Imports

GDP = $400 billion + $40 billion + $50 billion + $40 billion - $30 billion

GDP = $500 billion

Population = 80 million

Calculate the GDP per capita -

GDP per capita = GDP/Population = $500 billion/80 million = $6,250

The GDP per capita would be $6,250.

(iii)

Change in prices do not impact real GDP. Change in prices only impacts the nominal GDP.

So,

If all prices were to double overnight then,

Real GDP - There will be no change in value of real GDP per capita.

Nominal GDP - The value of nominal GDP per capita will double as well.

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