Major Variables of National Accounts

APT course

Home Assignment # 5

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National Accounts

Measuring GDP

a) The following is the description of all economic activity in country A.

• There are thousands of farmers in country A but only two big business firms: Specific Motors (an auto company) and Tasty Food (a chain of food markets). There is no government or depreciation.

• Specific motors produced 1 000 small cars, which they sold at $6 000 each, and 100 trucks, which they sold at $8 000 each. Consumers bought 800 of the cars, and the remaining 200 cars were exported to the neighbor country B. Tasty Food bought all the trucks.

• Sales at Tasty Food markets amounted to $14 mln, all of it sold to consumers.

• All the farmers of country A are self-employed and sell their output to Tasty Food.

• The costs incurred by all businesses were as follows (measured in dollars):

	Specific Motors	Tasty Food	Farmers
Wages	3 800 000	4 500 000
Interest	100 000	200 000	700 000
Rent	200 000	1 000 000	2 000 000
Purchases of food		7 000 000

Compute GDP for country A in three different ways, i.e. by the expenditure approach, the value added approach, and the income approach.

b) Suppose now both government and depreciation appeared in country A, and the following changes occurred in the country A’s economy:.

• The government bought 50 cars, leaving only 150 cars for export. In addition, the government spent $800 000 on wages for soldiers and made $1 200 000 worth of transfer payments.

• Depreciation for the year amounted to $600 000 for Specific Motors and $200 000 for Tasty Food.

• The government levied sales taxes amounting to $500 000 on Specific Motors and $200 000 on Tasty Food. In addition, the government levied a 10% income tax on all wages, interest and rental income.

• In addition to the food and cars mentioned in point (a), country A imported 500 computers from the neighbor country B at $2 000 each.

Taking these changes into account calculate GDP, personal income and disposable income.

Major Variables of National Accounts

Consider the following data about the U.S. economy in 2008 (in billions of dollars).

ITEM	AMOUNT
Exports	1,831.1
Income receipts from the rest of the world	809.2
Consumption of fixed cap­ital	1,847.1
Net private domestic fixed investment	323.7
Taxes on corporate income	292.2
Compensation of employees	8,037.4
Personal consumption expenditures	10,129.9
Indirect taxes	1,047.3
Imports	2,538.9
Personal income from assets (dividends and interest payments, received by persons) of which from the government	1,994.4   230.6
Income payments to the rest of the world	667.3
Changes in business inventories	-34.7
Contributions for government social insurance	990.6
Retained earnings	378.3
Corporate profits	1,360.4
Net interest	815.1
Personal taxes	1,432.4
Personal transfer receipts, of which social benefits from the government	1,875.9 1,843.2
Subsidies to business	53.5
Rental income of persons	210.4
Non-tax receipts of the government	314.4
Disposable personal income	11,014.2

Source: Survey of Current Business, January 2010

(a) Calculate Gross Domestic Product; Gross National Product; Net Domestic Product; Net National Product; National Income; Personal Income; Personal Saving; Proprietors’ Income; Government Purchases of Goods and Services, Net Factor Income from Abroad.

(b) Does government run a deficit or a surplus? Is government a lender or a borrower in this economy?

(c) What is the trade balance? Is the country a borrower or a lender in the international financial markets? Is there capital inflow or outflow?

(d) How is investment financed in this economy?

Дата добавления: 2015-11-14