Question 2 - Consider an economy that produces bread and cars. In the table 2.1 below are data for the different years: Table 2.1 Year 2008 Year 2018 Price of a loaf of bread $10 $20 Number of loaves of bread 500,000 400,000 Price of a car $50,000 $60,000 Number of cars produced 100 120 Using the year 2008 as the base year, compute the following for each year: i. Nominal GDP ii. Real GDP iii. How much have prices risen between year 2008 and 2018? b. Consider the scenario. The country Global-Land is really small and only has 500 In 2023 in total, they spend ECD 200,000 per year on food, ECD 200,000 on clothing, and ECD 100,000 on public and private transport. The economy of Global-Land has three industries: Juice, Clothing and Furniture. The output of each industry is disposed either on the domestic market or exported. The institutional sectors of the economy are the Household, Government, Corporate and Rest of the World, which either purchase the products of the industries or provide the factor services. The Juice and Clothing industries just bought ECD 2,000,000 worth of new machinery. Meanwhile, the Furniture is the largest industry. This industry has increased its inventory by ECD 200,000 as compared to the previous year. In addition to that, a Global-Land resident buys a new house worth ECD 300,000. Of course, the government of Global-Land knows how important education is. Therefore, it spends ECD 1,000,000 a year to run a public school and pay all the teachers who work there. In addition to that, the government contributes ECD 500,000 to fix broken roads and highways throughout the year. In addition, Global-Land total domestically produced goods and services is worth ECD 1,500,000 this year. In the meantime, the country also purchase foreign goods and services is worth ECD 1,000,000. i. Using the information provided in the scenario, calculate GDP using the expenditure approach. Please show all components of each measure. ii. Further information on the activities of the Juice industry in 2023 is provided in table 2.1 below in millions of Eastern Caribbean dollars (ECD). Table 2.1 ECD million Subsidies 0 Gross national product at market prices 300 Imports 30 Net national product 275 Exports 30 Net national product at factor cost 260 Personal savings 15 Personal income 225 Government transfer payments 5 Undistributed corporate profits 20 Government expenditure on commodities 40 Personal consumption 160 Using the following Global-Land 2022 data in table 2.1 provide Estimates of the Following Key National Accounting Aggregates: a. Personal disposable income b. Indirect taxes c. Net investment d. Depreciation e. Corporate income taxes f. Personal income taxes

Question 2 - Consider an economy that produces bread and cars. In the table 2.1 below are data for the different years: Table 2.1 Year 2008 Year 2018 Price of a loaf of bread $10 $20 Number of loaves of bread 500,000 400,000 Price of a car $50,000 $60,000 Number of cars produced 100 120 Using the year 2008 as the base year, compute the following for each year: i. Nominal GDP ii. Real GDP iii. How much have prices risen between year 2008 and 2018? b. Consider the scenario. The country Global-Land is really small and only has 500 In 2023 in total, they spend ECD 200,000 per year on food, ECD 200,000 on clothing, and ECD 100,000 on public and private transport. The economy of Global-Land has three industries: Juice, Clothing and Furniture. The output of each industry is disposed either on the domestic market or exported. The institutional sectors of the economy are the Household, Government, Corporate and Rest of the World, which either purchase the products of the industries or provide the factor services. The Juice and Clothing industries just bought ECD 2,000,000 worth of new machinery. Meanwhile, the Furniture is the largest industry. This industry has increased its inventory by ECD 200,000 as compared to the previous year. In addition to that, a Global-Land resident buys a new house worth ECD 300,000. Of course, the government of Global-Land knows how important education is. Therefore, it spends ECD 1,000,000 a year to run a public school and pay all the teachers who work there. In addition to that, the government contributes ECD 500,000 to fix broken roads and highways throughout the year. In addition, Global-Land total domestically produced goods and services is worth ECD 1,500,000 this year. In the meantime, the country also purchase foreign goods and services is worth ECD 1,000,000. i. Using the information provided in the scenario, calculate GDP using the expenditure approach. Please show all components of each measure. ii. Further information on the activities of the Juice industry in 2023 is provided in table 2.1 below in millions of Eastern Caribbean dollars (ECD). Table 2.1 ECD million Subsidies 0 Gross national product at market prices 300 Imports 30 Net national product 275 Exports 30 Net national product at factor cost 260 Personal savings 15 Personal income 225 Government transfer payments 5 Undistributed corporate profits 20 Government expenditure on commodities 40 Personal consumption 160 Using the following Global-Land 2022 data in table 2.1 provide Estimates of the Following Key National Accounting Aggregates: a. Personal disposable income b. Indirect taxes c. Net investment d. Depreciation e. Corporate income taxes f. Personal income taxes

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter6: Tracking The U.s. Economy

Section: Chapter Questions

Problem 4.9P

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Question 2 -

Consider an economy that produces bread and cars. In the table 2.1 below are data for the different years:

Table 2.1
	Year 2008	Year 2018
Price of a loaf of bread	$10	$20
Number of loaves of bread	500,000	400,000
Price of a car	$50,000	$60,000
Number of cars produced	100	120

	Using the year 2008 as the base year, compute the following for each year:
i.	Nominal GDP
ii.	Real GDP
iii.	How much have prices risen between year 2008 and 2018?

b. Consider the scenario. The country Global-Land is really small and only has 500 In 2023 in total, they spend ECD 200,000 per year on food, ECD 200,000 on clothing, and ECD 100,000 on public and private transport. The economy of Global-Land has three industries: Juice, Clothing and Furniture. The output of each industry is disposed either on the domestic market or exported. The institutional sectors of the economy are the Household, Government, Corporate and Rest of the World, which either purchase the products of the industries or provide the factor services. The Juice and Clothing industries just bought ECD 2,000,000 worth of new machinery. Meanwhile, the Furniture is the largest industry. This industry has increased its inventory by ECD 200,000 as compared to the previous year. In addition to that, a Global-Land resident buys a new house worth ECD 300,000. Of course, the government of Global-Land knows how important education is. Therefore, it spends ECD 1,000,000 a year to run a public school and pay all the teachers who work there. In addition to that, the government contributes ECD 500,000 to fix broken roads and highways throughout the year. In addition, Global-Land total domestically produced goods and services is worth ECD 1,500,000 this year. In the meantime, the country also purchase foreign goods and services is worth ECD 1,000,000.

i. Using the information provided in the scenario, calculate GDP using the expenditure approach. Please show all components of each measure.

ii. Further information on the activities of the Juice industry in 2023 is provided in table 2.1 below in millions of Eastern Caribbean dollars (ECD).

Table 2.1

	ECD million
Subsidies	0
Gross national product at market prices	300
Imports	30
Net national product	275
Exports	30
Net national product at factor cost	260
Personal savings	15
Personal income	225
Government transfer payments	5
Undistributed corporate profits	20
Government expenditure on commodities	40
Personal consumption	160