Cut Times New Ro 12 A. Aa- copy ,Format Painter IB | Clipboard ste abc x: x2 A,?

Question

Cut Times New Ro 12 A. Aa- copy ,Format Painter IB | Clipboard ste abc x: x2 A,?·A- | t I U : . ?1 No Spac.? T Norrmal Heading 1 . Heading 2 Title Subtitle Subtle E Font Peragraph Styles Instructions For Question No 1, each student should explain, in detail, their answers For Question No 2, each student must show all calculations 1. Which of the following transactions would count in GDP? Explan each option (A-F) In detail. A. Kerry buys a new sweater to wear this winter B. Patricia receives a Social Security check C. Roberto gives his daughter $50 for her birthday. D Latika sells $1,000 of Google stock E Karen buys a new car F Amy buys a used car 2. Using the following national income accounting data, compute (a) GDP. (b) NDP. and (c) NI All figures are in billions Show all calcu ations not just the final numb $194.2 17.8 11.8 59.4 14.4 52.1 13.9 16.5 40.5 2.2 219.1 Compensation of employees U.S. exports of goods and services Consumption of fixed capital Taxes on production and imports Net private domestic investment Transfer payments U.S Imports of goods and services Personal taxes Net foreign factor income Personal consumption expenditures Statistical discrepancy

Explanation / Answer

Answer:

GDP is the sum of all goods and services produced in a country in a financial

Following will be not included :

2.

a) GDP calculation :

GDP = consumption expenditure + investment expenditure + government expenditure + Net exports (export-import)

GDP = personal consumption expenditure + (net private domestic investment + consumption of fixed capital) + government purchases +(U.S. exports of goods and services – U.S. imports of goods and services )

= 219.1 + (52.1+11.8) + 59.4 + (17.8 – 16.5 )

= 219.1+ 63.9 + 59.4 + 1.3

GDP = 343.7

*(consumption of fixed capital (depreciation) will be included in net private domestic investment to calculate GDP )

b) NDP (net domestic product):

NDP = GDP – depreciation (consumption of fixed capital)

         = 343.7 – 11.8

NDP = 331.9

c) NI (National income )

national income = NDP + net foreign factor income

                           = 331.9 + 2.2

                           National income = 334.1      

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