Question

Components	Trillions of $
Consumption	$10
Durable Goods	$3
Nondurable Goods	$4
Investment	$2
Services	$10
Government Purchases	$5
Structures	$1
Changes in Inventories	$1
Exports	$3
Imports	-$1
Income receipts from rest of the world	$2
Income receipts to rest of the world	$1
Depreciation	$3

1. According to the data above, calculate net exports.
2. With the data above, use both the demand side or supply side approach to calculate GDP for this economy.
3. Using the data above calculate Net National Product (NNP).
4. Now assume the GDP deflator during this given year is 112, calculate Real GDP.

Answer 1

Net exports = Value of export - value of import

= ( $3 - $ 1) = $2 trillion

Calculation of GDP = The most common method of calculation of GDP is expenditure method which is

= Private Consumption + Investment + Government spending + Net exports

Here

Private consumption = (Durable + non durable goods + services + consumption)

= ( $3 + $4 + $10 + $10) = $27 trillion

Investment = ( Investment + change in stock )

= ($2 + $1) = $3 trillion

Government spending = ( Government purchases + structure )

= ( $5 + $1) = $6 trillion

Net export = $2 trillion

GDP = ($27 + $3 + $6 + $2) = $38 trillion

Net national product =  GDP - Depreciation - Net income to rest of the world + Net income from rest of the world

= ($38 - $3 - $1 + $2)

= $36 trillion

Real GDP = (Nominal gdp / GDP deflator) *100

= ( $38 / 112) * 100 = $33.93 trillion