3. The table below gives some of the items in a country\'s national accounts. Am

Question

3. The table below gives some of the items in a country's national accounts. Amount (billions of dollars) 4.97 Item Consumption expenditure Investment Government expenditure Net exports Wages, salaries, and supplementary labour ncome Interest and investment ncome Profits of corporations and government enterprises Income from farms and unincorporated businesses Depreciation 1.14 1.37 -0.08 4.20 0.90 0.67 0.11 0.89 a. Use the expenditure approach to calculate GDP b. Calculate net domestic income at factor cost. c. Calculate GDP minus net domestic income at factor cost. d. Calculate indirect taxes less subsidies.

Explanation / Answer

(a)

GDP at MP by expenditure approach

= Consumption expenditure + investment + govenment expenditure + net export

=4.97+1.14+1.37+{-0.08}

=$7.4 billion

(b)

NDP at FC= Wages, salaries and labor supplementary income +Interest and investment income +Profit of organization and government enterprise+Income from farms and other unincorporated businesses

=4.20+0.90+0.67+0.11

=$5.88 billion

(c)

GDP at MP - NDP at FC=$7.4 billion -$5.88 billion

=$1.52 billion

(d)

GDP at FC = NDP at FC + depreciation

=$5.88 +$0.89

=$6.77

Indirect taxes less subsidies = GDP at MP - GDP at FC

=$7.4-$6.77

=$0.63

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