Question : ( kindly Solve in details by showing how the numbers came ) Component
ID: 1189796 • Letter: Q
Question
Question : ( kindly Solve in details by showing how the numbers came )
Components of GDP
(Value in US$ billions)
Consumption:
11150
Durable Goods
1203
Non-durable Goods
2567
Services
7380
Investment:
2475
Business Fixed Investment
1970
Residential Investment
439
Change in Business Inventories
66
Government Purchases:
3167
Federal Level
1296
State and Local level
1871
Net Exports:
-547
Feral Level
2196
State and Local level
2743
Net Foreign Factor Income:
500
Depreciation Allowances:
245
By Using macroeconomics data given in the above table; Formulate GDP Equation and calculate the followings:
Gross Domestic Product (GDP)
Gross National Product (GNP)
Net National Product (NNP)
Components of GDP
(Value in US$ billions)
Consumption:
11150
Durable Goods
1203
Non-durable Goods
2567
Services
7380
Investment:
2475
Business Fixed Investment
1970
Residential Investment
439
Change in Business Inventories
66
Government Purchases:
3167
Federal Level
1296
State and Local level
1871
Net Exports:
-547
Feral Level
2196
State and Local level
2743
Net Foreign Factor Income:
500
Depreciation Allowances:
245
Explanation / Answer
The above problem can be solved by using the Expenditure Approach to calculate GDP.
GDP = Consumption + Investment + Government Purchases + Net Exports.
GNP = GDP + Net Foreign Factor Income.
NNP = GNP - Depreciation Allowances.
Therefore, from above table we can calculate the following as follows:
GDP = 11150 + 2475 + 3167 + (-547) = 16245
GNP = 16245 + 500 = 16745
NNP = 16745 - 245 = 16500
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