Consider the following hypothetical data for the US economy in 2012 (all amounts

Question

Consider the following hypothetical data for the US economy in 2012 (all amounts are in trillions of dollars).

a) Based on the data, what are the GDP, NDP, and NI?

b) Suppose that in 2013, exports fall to $2.3 trillion, imports rise to $2.85 trillion, and gross private domestic investment falls to $2.25 trillion.

What will the GDP be in 2013, assuming that other values do not change between 2012 and 2013?

c) Note that according to the fictitious data in (b), depreciation (capital consumption

allowance) exceeds gross private domestic investment in 2013. How would this

affect future US productivity, particularly if it were to continue beyond 2013?

Explanation / Answer

a) GDP = consumption + investment + (government spending) + (exports - imports) GDP = 11 + 3 + 2.8 + (2.5 - 2.7) = 16.6 GNP = GDP - Depreciation GNP = 16.6 - 1.3 = 15.3 NI = Consumption + Investments + Government spending + net exports (exports minus imports) - indirect taxes - depreciation NNI = GNP - indirect taxes = 15.3 + 0.8 = 14.5

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.