National Accounting (the value of GDP should be the same all along the exercice)
Say that PmQ = 20 (market value of domestic production), J = 5 (imports), FC = 8.5 (total final consumption), IC = 4 (intermediate consumption), IT = 4 (total investment), Δinventories = 2.5 (change in inventories).
1- Value of GDP
a. 12
b. 14
c. 16
d. 18
2- What is the value of exports and the trade balance (net exports)?
a. 1
b. 4
c. 5
d. 6
3- What is the value of all the sources of products? What about the uses?
a. 16, 25
b. 17, 16
c. 20, 20
d. 25, 25
Say that private domestic consumption and public (i.e. government) investment have the following respective value: C = 5, GI = 2.
4- Calculate each component of the expenditure approach to GDP.
a. C = 5, I = 2, G =7, NX = 2
b. C = 5, I = 4.5, G =5.5, NX = 1
c. C = 5, I = 4.5, G =3.5, NX = 3
d. C = 5, I = 5, G =5, NX = 1
Now that you know the preceding, say that:
- The net revenues from abroad (NRA) are equal to 3
- The discrepancy between GDP and NI is due only to consumption of capital (CC = 1) and NRA.
- Wage earners pay half of the indirect taxes. They pay 1.5 of indirect taxes
- Wage earners are responsible for 99% of the private domestic consumption level in the economy
- Subsidies are equal to 1.
- As a whole, there are no net transfers given to households.
- W= 8, Πn = 4, iL = 2, R = 2,
- Direct tax rates are: tΠ = 5%, tiL = 10%, tR = 50%, tw = 20%.
5- What is the value of the GNP?
a. 16
b. 19
c. 21
d. 25
6- What is the value of NI?
a. 18
b. 19
c. 20
d. 21
7- What is the value of indirect taxes (Tind)?
a. 0
b. 3
c. 9
d. 10
8- Calculate national income by using the income sources?
a. 17
b. 18
c. 20
d. 21
9- What is the value of direct taxes (Td)? What is the value of total taxes (T)?
a. 0
b. 3
c. 9
d. 10
10- What is the value of total taxes (T)?
a. 2
b. 4
c. 6
d. 8
11- Excluding transfers, does the government generate a surplus or a deficit?
a. -1
b. -0.5
c. 0.5
d. 2
12- What is the value of disposable income for wage earners?
a. 0.7
b. 2.6
c. 3.2
d. 4.9
13- What is then the value of saving by wage earners (S)?
a. -.05
b. 0
c. 1
d. 1.3
The following may help you (remember that we follow the NIPA definitions, not the book definitions)
So, what is your question?
To find the answers to the given questions, we need to understand how different components of national accounting are calculated.
1. Value of GDP: The GDP (Gross Domestic Product) is calculated by summing up the market value of all final goods and services produced within a country's borders during a specific time period. It includes consumption, investment, government spending, and net exports (exports-imports).
To calculate GDP, we add up the following components:
GDP = Final Consumption (FC) + Investment (IT) + Government Spending (G) + Net Exports (NX)
Given values: FC = 8.5, IT = 4, J (imports) = 5, Δinventories = 2.5
GDP = FC + IT + G + NX
= 8.5 + 4 + 0 + (J - Δinventories)
= 8.5 + 4 + 0 + (5 - 2.5)
= 8.5 + 4 + 0 + 2.5
= 15
Therefore, the value of GDP is 15.
2. Value of Exports and Net Exports (Trade Balance): Net Exports (NX) is the difference between exports and imports.
To find the value of exports, we need to subtract imports (J) from the total value of market production (PmQ).
Exports = PmQ - J
= 20 - 5
= 15
Net Exports = Exports - Imports
= 15 - 5
= 10
Therefore, the value of exports is 15 and the trade balance (net exports) is 10.
3. Value of All Sources of Products and Uses: The value of all sources of products is the sum of final consumption (FC), investment (IT), and government spending (G). The value of all uses is the sum of final consumption (FC), intermediate consumption (IC), and change in inventories (Δinventories).
Value of all sources of products = FC + IT + G
= 8.5 + 4 + 0
= 12.5
Value of all uses = FC + IC + Δinventories
= 8.5 + 4 + 2.5
= 15
Therefore, the value of all sources of products is 12.5, and the value of all uses is 15.
4. Components of Expenditure Approach to GDP: The expenditure approach to GDP includes consumption (C), investment (I), government spending (G), and net exports (NX).
Given values: C = 5, GI (Government Investment) = 2
Expenditure approach:
C = C
I = IT
G = G
NX = Exports - Imports
Therefore, the components of the expenditure approach are:
C = 5
I = 4
G = 0 (Not given, assuming government spending is zero)
NX = 15 - 5 = 10
Hence, the answer is option b. C = 5, I = 4, G = 0, NX = 10.
Now let's proceed to the next set of questions based on the provided information.