Question

Expenditure Items	$Billions
Depreciation Receipts of factor income from the rest of the world Exports State & local purchases of goods Payments of factor income to the rest of the world Net private domestic investment Imports Personal taxes Personal consumption expenditure Dividends Change in business inventories	30 20 500 250 40 150 40 90 500 10 30

Determine:

i)                The value of Gross Private Domestic Investment                                        

ii)              The value of GDP using the Expenditure approach

iii)             The value of net exports

iv)             The value of GNP                                                                                     

v)               The value of NNP                                                                                     

vi)             This country is experiencing positive economic performance. Do you agree? Give reasons for your answer  

Answer 1

1 - Gross private domestic investment

= Net investment + Depreciation

= 150+30

= $ 180 billion

2- GDP = C + I + G + (X-M)

= 500 + 180 + 250 + (500-40)

= 500 + 180 + 250 + 460

= $ 1360 billion

3- Net export = Export - Import

= 500-40

= $ 460 billion

4 - GNP = GDP + Net factor income from abroad

= 1360 + (20-40)

= 1360-20

= $ 1340 billion

5 - NNP = GNP - Depreciation

= 1340 - 30

= $ 1310 billion

6 - We cannot say that the country is experiencing the positive economic performance because from the given data the comparison is not possible. The income to abroad is greater than its inflow. Hence we cannot say that there is positive economic performance.