GDP Final Questions

Macro Economics

National Income Accounting Q no.1 Rs.

Exports

23

Governmentpurchases

147

Net foreign factor income earned in the country Consumption(personal)

343

Grosssaving

84

46

Imports

33

Private-sector investment in equipment and construction (gross)

79

Corporateprofits

28

Consumptionoffixedcapital

38

Indirectbusinesstaxes

417

Interestonpublicdebt

10

Dividendspaidbycompanies

Rs.

Personal income

60

Changeinprivate-sectorinventories

3

Corporatesaving

18

12

Personal taxes

83

Required:Calculate the GDP by expenditure approach then find the value of GNP, NNP, NI fc, and DPI.

Q no.2 Rs.

Gross investment Netnationalproduct

20

CC P 200

Netforeignfactorincome

3

Undistributed profits Other income not paid

Rs.

Indirect taxes

Transferpayments

40

Corporateprofittaxes

5

1

30 9

Personal taxes

Net Investment

22 15

Required:Calculate the GDP, GNP, NIfc, PI and DPI.

Q no.3

Rs.

Consumption

Rs.

Investment 3,000

Government spending

1,100 Exports

1,200 Imports

400 Depreciation

450 Factor income received from rest of world 230

580 Payments of factor income to rest of world

220

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Macro Economics Indirectbusinesstaxesandsubsidies

440

Directtaxes

50

Required:Calculate the GDP, GNP, NNP, NIfc, PI and DPI.

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Macro Economics

Q no.4 Rs.

Expenditures for consumer goods and services

3,750

Exports

670C

Governmentpurchasesofgoodsandservices

1,100

Socialsecuritytaxes

400

Net investment

Rs.

Indirect business taxes orporate income taxes

135

Personalincometaxes Grossinvestment

170

Imports

Corporate retained earnings

440

35

700 800 710

Government transfer payments to households

660

Required:Calculate the GDP, NDP and NIfc. Find Depreciation and Net exports.

Q no.5 Rs.

PersonalTaxes

40

Rs.

Undistributedcorporateprofits

35

SocialSecutityContributions

15

GovernmentPurchases

90

IndirectBusinesssTaxes

20

GrossPrivateDomesticInvestment

75

CorporateIncome Taxes

40

U.S. Imports

Transferpayments

22

PersonalConsumptionExpenditures

U.S.Exports

24

NetPrivatedomesticinvestment

Net Foreign Factor Income Earned in the U. S

10

22 250 50

Required:Calculate GDP &GNP expenditure approach and find NDP, NI, PI, DI.

Answers

CC P

1. GDP = 577, GNP = 567, NNP = 507, NIfc = 461, DI = 334 2. GDP = 208, GNP = 205, NIfc = 170, PI = 195, DI = 173 3. GDP = 5250, GNP = 5260, NNP = 4680, NIfc = 4240, DI = 4190 4. GDP = 5610, NDP = 4980, NIfc = 4540, Depreciation = 630, Net Exports = -40

5. GDP = 417, GNP = 407, NDP = 392, NIfc = 362, PI = 294, DI = 254

Multiplier Q no.1

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Macro Economics Suppose that the economy is characterized by the following behavioral equations: C = 160 + 0.6 YD I = 150 G = 150 T = 100 a. Solve for equilibrium GDP (Y), Disposable income (YD), Consumption & Saving? b. Assume that G is now equal to 110. Solve for equilibrium output. c. Assume that Ye now 1200, what is change in I or T?

Q no.2 Consider the following equations describing an economy, where Y is real output, C is consumption, I is investment, Yd is disposable Income, G is government spending, and T is taxes. For simplicity, let X (net exports) be zero. C = 100 + 0.8Yd, I = 500, G = 600, T = 0.25 Y. a. What is the equilibrium level of income? b. If Investment falls by 200, what is the change in equilibrium income? c. If G rise by 100, what is the change in equilibrium income?

Q no.3 If Adnan receives $1000 from his newly created Govt. job and gives $900 to Ali for writing him a speech, and then Ali gives $810 to Kumail for installing a computer system, assuming everyone else in the nation has the same spending pattern: a. How much is the multiplier? b. If $10 billion of new investment had been made, by how much would our GDP rise?

Q no.4 Y = C+I+G (1) C=C0+c(Y-T) (2) T=T0 (3) I=I0 (4) G=G0 (5) What is Ye if T 0=12.5, G0=12.5, I0=20, C0=2.5 and c=0.8? a. What is the flow of saving? b. Derive the Investment, Government and Tax Multipliers? c. What is Ye if Investment, Government and Tax double? d. If Ye is now 200.How much change in G or T? e. Prove I+G = S+T Now replace (3) with T=0.1Y. Repeat questions a) b) c) d) and e).

Q no.5 Y=C+I+G

Ye = 3000

CC P

C = 300 + .75(Y - T) G = 500 2=I5 0 4=T 00

C=2250

G = 500 2=I5 0 4=T 00

S=350

Let's try changing the level of government spending. See if you can solve for equilibrium levels of Y, Yd, C, and S for each of these different levels of government spending. 1. 2. 3. 4.

Raise G by 200, to 700 Raise G by 100, to 600 Cut G by 100, to 400 Cut G by 200, to 300

Calculate the change in equilibrium income in all above cases.

Q no.6 Y=C+I+G C G I T

= = = =

400 + .9(Y - T) 300 250 0.1Y

1. If equilibrium Income is 5000 then Calculate saving. 2. Prove i. Y = C + I + G ii. C + I + G = C + S + T

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