1. Use the data below to answer the questions that follow. (10 marks) Item Amoun
ID: 1156513 • Letter: 1
Question
1. Use the data below to answer the questions that follow. (10 marks) Item Amount (in billions of dollars)
Consumption expenditure 300
Government expenditure 99
Interest and investment income 31
Profit of corporations and government enterprises 54
Income from farms and unincorporated businesses 40
Gross investment 146
Exports 36
Imports 56
Wages, salaries, and supplementary labour income 275
Capital consumption allowance (depreciation) 50
Indirect taxes, less subsidies 75
a. Calculate net exports. (1 mark)
b. Use the expenditure approach to calculate GDP. (2.5 marks)
c. Use the income approach to calculate GDP. (2.5 marks)
d. Calculate net domestic product (at factor cost). (2 marks)
e. Calculate net domestic income (at market price). (2 marks)
Explanation / Answer
a) Net Exports (NX) =Exports - Imports = 36 - 56 = - 20
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b) By expenditure approach
GDP = C + I + G + NX
GDP = 300 + 99 + 146 + ( - 20)
GDP = 525
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c) By Income approach,
GDP =Interest and investment income 31 + Profit of corporations and government enterprises 54 + Income from farms and unincorporated businesses 40 + Wages, salaries, and supplementary labour income 275 + Capital consumption allowance (depreciation) 50 + Indirect taxes, less subsidies 75
GDP = 525
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d) NDP at factor cost = NDP (at market price) - Indirect taxes, less subsidies = 475 - 75 = 400.
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e) NDP at market price = GDP - Depreciation = 525 - 50 = 475
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