Question

The table below shows the national accounts for a hypothetical economy, Macronia. ($ billions) Government purchases...

The table below shows the national accounts for a hypothetical economy, Macronia.

($ billions)
Government purchases 17
Proprietors' income and rents 11
Exports 5
Indirect taxes 9
Gross investment 13
Wages and salaries 29
Corporate income 21
Imports 5
Net investment 9
Personal consumption 30
Statistical discrepancy ?


a. The expenditure-based estimate of Macronia's GDP is $  billion.

b. The income-based estimate of Macronia's GDP is $  billion.

c. The value of the statistical discrepancy which is added to the lower estimate and subtracted from the higher estimate to find a single GDP value is $  billion.

d. Macronia's GDP is $  billion.

e. The value of Macronia's depreciation is $  billion.

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Answer #1

a. Expenditure based GDP = Govt. purchases + (Exports - Imports) + Gross Investment + Personal Consumption

= 17 + 0+ 13 + 30

= $60

b.

Income based GDP:

NDP at FC = Proprietors' income and rents + Wages and salaries + Corporate income

= 11 + 29 + 21

= 61

Depreciation = Gross Investment - Net Investment = 13 - 9 = 4

GDP at MP = NDP at FC + depreciation + Indirect taxes

= 61 + 4 + 9

= 74

c.

Statistical Discrepancy = GDP expenditure - GDP income

= 60 - 74

= -14

d.

Macronia's GDP = Govt. purchases + (Exports - Imports) + Gross Investment + Personal Consumption

= 17 + 0+ 13 + 30

= $60

e.

Depreciation = Gross Investment - Net Investment = 13 - 9 = 4

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