Question

Wages and salaries 6423 Indirect Taxes 613 Exports 954 Net Investment 1425 Gross investment 1850 Consumption...

Wages and salaries

6423

Indirect Taxes

613

Exports

954

Net Investment

1425

Gross investment

1850

Consumption expenditure

5107

Depreciation

425

Government subsidies to firms

125

Undistributed profits

78

Business/Corporate profits

1256

Imports

982

Mixed Income

652

Government purchases

2315

Calculate the GDP following the income method and expenditure method. In your answer you must show the equation you have used for the calculation. (5+5 = 10 marks).

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Homework Answers

Answer #1

Expenditure Method

GDP= Consumption Expenditure+Gross Investment+Government Purchases+Net Exports

where Net Exports = Exports - Imports

GDP= 5107+1850+2315+(954-982)

= 5107+1850+2315-28

= 9244

Hence, using expenditure method, GDP is 9244.

Income Method

GDP= Wages and Salaries+Mixed Income+Business/Corporate Profits+Net Indirect Taxes+Depreciation

where Net Indirect Taxes= Indirect Taxes-Government Subsidies to Firms

GDP= 6423+652+1256+(613-125)+425

= 6423+652+1256+488+425

= 9244

Hence, using income method, GDP is 9244.

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