Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 7, Problem 15CQ
(a)
To determine
Measure the
(b)
To determine
Measure the gross domestic product (GDP) using the income method.
Expert Solution & Answer
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Students have asked these similar questions
Using the expenditure approach, calculate GDP
using the following data:
Item Amount in dollars (billions)
Consumption 7,600
Consumption of Durable Goods 1,600
Consumption of Non Durable Goods 2,800
Consumption of Services 3,200
Investment 2,750
Fixed Investment 1,000
Government purchases of Goods & Services 1,675
Government Transfer Payments 450
Exports 750
Imports 1,600
GDP Equals
Based on the tables below, answer the questions posed.
Component of Gross Domestic Product (GDP)
RM million
Consumption on durable and non-durable goods
1,600
Consumption of services
700
Residential and non-residential investment
860
Change in inventories
– 50
Corporate profit
610
Export
370
Import
230
Receipt of factor income from the rest of the world
840
Payment of factor income to the rest of the world
770
a) Calculate the Gross Domestic Product (GDP) using the expenditure approach.
Using the incomes approach, calculate GDP at basic prices based on the numbers
from this table:
1 Wages and salaries
2
3
4
Compensation of employees
Net operating surplus: Corporations
Gross mixed income
5 Taxes less subsidies on production
Net mixed income
7 Taxes less subsidies on products and imports
8
67
6
9
10
11
12
Consumption of fixed capital: Unincorporated businesses
Consumption of fixed capital: General government and NPISH
Gross operating surplus
Employers' social contributions
Consumption of fixed capital: Corporations
$3545
$3600
$3680
$3725
A value greater than $3725
1800
2000
550
600
45
570
80
30
50
1000
200
400
Chapter 7 Solutions
Economics: Private and Public Choice (MindTap Course List)
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Similar questions
- List some of the reasons why economists should not consider GDP an effective measure of the standard of living in a county.arrow_forwardThe gross domestic product (GDP) of the United States is defined as the _market value of v all final goods and services produced within the United States in a given period of time. Based on this definition, indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in 2020. 2020 GDP Scenario Included Excluded Fastlane, a Japanese automobile company, produces a sedan at a plant in Indiana on December 14, 2020. A family buys the sedan on December 24. Rotato, a U.S. tire company, produces a set of tires at a plant in Michigan on September 25, 2020. It sells the set of tires to Speedmaster for use in the production of a two-door coupe that will be made in the United States in 2020. (Note: Focus exclusively on whether production of the set of tires increases GDP directly, and ignore the effect of production of the two-door coupe on GDP.) You chop down a cherry tree on your property in California and make a dining room table in…arrow_forwardUsing the data below, calculate GDP by using expenditure approach: Year 2017 RM (million) 700 2500 790 670 1000 3200 2300 9000 450 900 2000 1000 500 9300 3100 5500 4500 Item Factor income paid abroad Import of goods and services Corporate taxes Retained earnings Depreciation Export of goods and services Subsidies Private Investment Personal Income tax Social security contribution Change in stock Transfer payment Indirect business tax Public Investment Consumption Government expenditure Factor income receive from abroad Calculate the Year 2018 RM (million) 450 3000 900 590 1200 4500 3790 8900 600 900 -350 1200 650 7800 8000 5600 3200 Gross domestic product at market price Gross National product at market price Gross National product at factor cost а. b. С. National Income Personal Income d. е. Disposable personal Income Gross domestic product at factor cost f. g.arrow_forward
- Item Measuring U.S. GDP: Using the information in the table below, calculate GDP via the expenditure approach. Expenditure Approach: Consumption expenditure Wages Investment Interest, Rent, Profits Government expenditure Exports Indirect Taxes less subsidies Depreciation Imports Dollars 15,400 8,500 2,100 4,100 3,200 3,000 1,100 2,000 8,000arrow_forwardInstructions: Answer the following questions Question 1 $ Total consumer expenditure 400 000 Government spending 148 000 Gross domestic capital formation 160 000 Value of physical increases in stock 8 000 Export of goods 72 000 Import of goods 68 520 Subsidies 5 560 Taxes on expenditure 6 960 Capital consumption 22 000 Income from abroad 31 600 Income paid abroad 29 600 Use the information above to calculate GDP using the expenditure methodarrow_forwardUsing the data in the table, calculate GDP, GNP, NGNP, NI, PI, and disposable income.arrow_forward
- From the information in the table below, calculate the following statistics. Personal consumption N1,344 Investment 456 Net nonbusiness interest income 270 Government purchases 480 Profit 406 Employee compensation 1520 Net exports 24 Rents 2 Depreciation 278 Indirect business taxes 156 Corporate retained earnings 249 Net foreign factor income 5 Interest 98 Social Security taxes 150 Transfer payments 300 Personal taxes 214 Statistical discrepancy 0 Gross domestic product b. Gross national product c. Net domestic product National income e. Personal income f. Disposable personal incomearrow_forwardThe national accounts of Parchment Paradise are kept on (you guessed it) parchment. A fire destroys the statistics office. The accounts are now incomplete but they contain the data in the table. Dollars Item GDP (income approach) Consumption expenditure Indirect taxes less subsidies Other factor incomes Investment Government expenditure Wages Net exports 2,900 2,000 Calculate net domestic income at factor cost and the statistical discrepancy. 100 500 Net domestic income at factor cost is $ 800 400 The statistical discrepancy is $ 2,000 - 200arrow_forwardAccording to the circular-flow diagram, GDP a. can be computed as payments firms make to factors of production plus revenues they receive from the sales of goods and services. b. can be computed as the revenue firms receive from the sales of goods and services minus the payments they make to factors of production. c. can be computed as either the revenue firms receive from the sales of goods and services or the payments firms make to factors of production. d. can be computed as the payments firms make to factors of production, but not as revenues they receive from the sales of goods and services.arrow_forward
- Using the following national income accounting data, compute GDP, NDP, and NI. All figures are in billions. Round your answers to one decimal place. category value compensation of employees $ 196.2 U. S. exports of goods and services 19.8 Consumption of fixed capital 11.8 government purchases 59.4 taxes on production and imports 14.4 net private domestic investment 52.1 transfer payments 13.9 U. S. imports of goods and services 16.5 personal taxes Net foreign factor income Personal consumption expenditures Statistical discrepancy 40.5 2.2 219.1 0arrow_forwardCalculate GDP using the Income and Expenditure Approach.(all figures are in billions of dollars): Item Amount ($)Government purchase of goods and services 1,721.6Exports 1,096.3Receipts of factor income from the rest of the world 382.7Depreciation (consumption of fixed capital) 990.8Net fixed Investments 688.2Corporate income taxes 265.2Consumption expenditures 6,739.4Indirect business taxes 664.6Imports 1,475.8Payments of factor income to the rest of the world…arrow_forwardAnswer (iv) and (v)arrow_forward
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