Question

• List of Income:

Wages	$5,000
Scholarship	$29,000
Parents gift/allowance	$3,000
Total Income	$37,000
Subtract Transfer Payments	$36,000
GDP Income	$1,000

Spending:

Tuition for education (counted towards consumption)	$16,000
Food and Room	$16,000
Books	$200
Entertainment	$1,100
Transportation	$700
Total consumption	$34,000
Labor exports	$1,000
Foreign assets (savings acct)	$2,000

how would i fix these numbers my prof said i need to adjust my gdp income, total consumption, and foreign assets and how would i calculate gdp spending

Answer 1

1- GDP through income approach = wages + rental income + profit + interest

Here only wages is given as = $5000

So GDP = $5000

Scholarship, parents gift and transfer payments are included in GDP calculation

2- GDP through expenditure approach = consumption spending(C) + investments (I) + government spending (G) + net export (export - import)

GDP = Tuition for education+ food and room + books + entertainment + transportation + labor exports

           = 16000 + 16000 + 200 + 1100 + 700 + 1000

          = $35,000

So, GDP spending is $35,000

Foreign assets will not be included in GDP because the net export only includes export and import of goods and services while foreign assets include net export of goods and services, foreign investments and other assets etc.