Question

1. Calculate GDP, NDP, NI, PI, and DI from the following information. All numbers are in billions of dollars.

Wages $ 26,500
Consumption Expenditures $36,000
Government Expenditures $18,500
Imports $20,330
Exports $18,580
Property Taxes $16,000
Sales Taxes $9,715
Retained earnings $1,310
Personal Income Taxes $2,200
Private Domestic Investment Expenditures $15,650
Interest Income $1,940
Pay Roll taxes $1,300
Transfer Payments $880

Depreciation $1,300
Net Income Made Abroad by Americans $160
Indirect Business taxes $2,520
Corporate Income Taxes $320

2. Calculate a) labor force, b) labor force participation rate, and c) unemployment rate if the population of a country is 380 million people out which 92 million are under the age of 16, 58 million don't want to work and 20 million are looking for work.

3. Calculate the inflation rate from 2004-2005 if the index number in 2005 was 120 and the index number in 2004 was 135.

Answer 1

1

(a) GDP = Consumption expenditure + Private Investment Expenditure + Government expenditure + net export (Export - Import)

= 36,000 + 15,650 + 18,500 + (18,580 - 20,330)

= $ 68,400

(b) NDP = GDP - Depreciation

= 68400- 1300

= $ 67100 billions

(C) NI= NDP +NFIA -indirect business tax.

= 67100 +160 -2520

= $ 64740 billions

D) PI= NI - RE-CIT- PRT+TRP

= 64740 - 1310- 320-1300+880

= 62690 billions

E) DI= PI - Personal income tax.

62690 - 2200

=60490 billions

2.

A) Labor force=380-92-58=230million

B) labor force participation rate=(230/(380-92))*100%=79.86

C) unemployment rate=20/230*100%=8.695%

3.

inflation rate = CY index - P Y Index/ PY index ) * 100

120 - 135 / 135 *100

= - 11.11%