Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 21, Problem 5MCQ
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To calculate gross national income(GNI) from gross domestic product (GDP),__ must be added and ___ must be subtracted from GDP.
a) primary income payments, primary income reciepts
b)primary income receipts,primary income payments
c)subsidies for local production, tariffs on production from rest of the world
d)taxes from rest of world, subsidies received from rest of world
National income accounting for a certain country in the year for 2020 is given in Table 2. Based
on the table, answer the following questions.
Amount in $
(million)
180
8,120
3,800
1,320
4,230
12,000
10,120
12,100
8,000
3,120
3,240
Items
Net factor income
Consumption expenditure
Public investments
Import
Export
Government expenditure
Wages
Interest, rent and profit
Indirect taxes
Subsidies
Depreciation
a) By using expenditure approach, calculate Gross Domestic Product (GDP) at market price.
b) By using income approach, calculate Gross Domestic Product 9GDP) at market price.
c) Based on your understanding on Gross Domestic Product (GDP), explain why do you think
that GDP Ís important, and what is the limitation of GDP?
The gross domestic product (GDP) of the United States is defined as
the _market value of v all
final goods and services produced
within the United States
in a given period of
time.
Based on this definition, indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in
2020.
2020 GDP
Scenario
Included Excluded
Fastlane, a Japanese automobile company, produces a sedan at a plant in Indiana on December 14, 2020. A family buys
the sedan on December 24.
Rotato, a U.S. tire company, produces a set of tires at a plant in Michigan on September 25, 2020. It sells the set of
tires to Speedmaster for use in the production of a two-door coupe that will be made in the United States in 2020.
(Note: Focus exclusively on whether production of the set of tires increases GDP directly, and ignore the effect of
production of the two-door coupe on GDP.)
You chop down a cherry tree on your property in California and make a dining room table in…
Chapter 21 Solutions
Foundations of Economics (8th Edition)
Ch. 21.A - Prob. 1SPPCh. 21.A - Prob. 2SPPCh. 21.A - Prob. 3SPPCh. 21.A - Prob. 4SPPCh. 21.A - Prob. 5SPPCh. 21.A - Prob. 6SPPCh. 21.A - Prob. 7SPPCh. 21.A - Prob. 1IAPCh. 21.A - Prob. 2IAPCh. 21.A - Prob. 3IAP
Ch. 21.A - Prob. 4IAPCh. 21.A - Prob. 5IAPCh. 21.A - Prob. 6IAPCh. 21.A - Prob. 7IAPCh. 21 - Prob. 1SPPACh. 21 - Prob. 2SPPACh. 21 - Prob. 3SPPACh. 21 - Prob. 4SPPACh. 21 - Prob. 5SPPACh. 21 - Prob. 6SPPACh. 21 - Prob. 7SPPACh. 21 - Prob. 8SPPACh. 21 - Prob. 9SPPACh. 21 - Prob. 10SPPACh. 21 - Prob. 1IAPACh. 21 - Prob. 2IAPACh. 21 - Prob. 3IAPACh. 21 - Prob. 4IAPACh. 21 - Prob. 5IAPACh. 21 - Prob. 6IAPACh. 21 - Prob. 7IAPACh. 21 - Prob. 8IAPACh. 21 - Prob. 9IAPACh. 21 - Prob. 10IAPACh. 21 - Prob. 11IAPACh. 21 - Prob. 12IAPACh. 21 - Prob. 1MCQCh. 21 - Prob. 2MCQCh. 21 - Prob. 3MCQCh. 21 - Prob. 4MCQCh. 21 - Prob. 5MCQCh. 21 - Prob. 6MCQCh. 21 - Prob. 7MCQ
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Similar questions
- Assume you have the following data for a hypothetical country for a specific year (in billions of ZAR):Wages and Salaries: R2,500Interest: R300Rent: R200Profits: R1,000Taxes (Indirect Taxes Minus Subsidies): R400Depreciation: R500Given the data above, which of the following methods of calculating Gross Domestic Product (GDP) may beused?A. Expenditure approachB. Income approachC. Product approachD. Trade approacharrow_forwardHow does U.S. gross domestic product (GDP) differ from U.S. gross national product (GNP)? Select one: a. GNP = GDP - losses from depreciation b. GNP = GDP - depreciation - retained earnings c. GNP = GDP + transfer payments to households +- indirect sales taxes d. GNP = GDP + income earned by U.S. citizens abroad - income that foreign citizens earned in the U.S.arrow_forwardDetermine if the following would be included (I) or excluded (E) from the calculation of GDP. (d) An increase in business inventories _______ (e) The income of a tax accountant working for a business _______ (f) Income received from interest on a corporate bond ________ (g) Business expenditures on pollution control equipment ______ (h) Dr. Jung grows tomatoes in his backyard for home consumption _______arrow_forward
- From the information in the table below, calculate the following statistics. Personal consumption N1,344 Investment 456 Net nonbusiness interest income 270 Government purchases 480 Profit 406 Employee compensation 1520 Net exports 24 Rents 2 Depreciation 278 Indirect business taxes 156 Corporate retained earnings 249 Net foreign factor income 5 Interest 98 Social Security taxes 150 Transfer payments 300 Personal taxes 214 Statistical discrepancy 0 Gross domestic product b. Gross national product c. Net domestic product National income e. Personal income f. Disposable personal incomearrow_forwardd) Research the concept of measuring GDP using the value added approach and provide aworking definition?e) Explain the problem of "double-counting" and how it can be avoided in calculating GDP.arrow_forwardIn the expenditure approach, the total expenditures of the following entities are calculated, except a. Gross taxable incomes b. Net Exports c. Gross private domestic investment d. Government expendituresarrow_forward
- Gross Domestic Product The U.S. gross domesticproduct (GDP) (in trillions of dollars) for selectedyears from 2005 and projected to 2070 can be modeled by y = 0.116x2-3.792x + 45.330, where xis the number of years after 2000. During what yearsbetween 2005 and 2070 was the gross domestic product no more than $23.03 trillion?arrow_forwardPersonal consumption expenditures $4,750 Exports $810 Federal government spending $1,400 Social Security taxes $600 Depreciation $450 Indirect Business Taxes $550 New Residential Construction $800 Imports $850 Non Residential Investment $300 Corporate Income Taxes $200 Corporate Profits $50 Personal Taxes $800 Business Taxes $1,000 Transfer Payments $700 Part A: In the table above and using the Expenditure Approach calculate the Gross Domestic Product (GDP) in millions of dollars Part B: Now assume that consumers purchase an extra $2000 of goods produced overseas, i.e., the consumption expenditures (from Part A) increase to $6,750. How would this scenario affect the GDP deflator, i.e., increase, decrease, remain unaffected or there is not enough information to tell?arrow_forwardUsing the following national income accounting data, compute (a) GDP, (b) NDP, and (c) NI. All figures are in billions. Category Compensation of employees U.S. exports of goods and services Consumption of fixed capital Government purchases Taxes on production and imports Net private domestic investment Transfer payments U.S. imports of goods and services Personal taxes Net foreign factor income Personal consumption expenditures Statistical discrepancy Instructions: Round your answers to 1 decimal place. a. GDP = $ billion b. NDP = $ c. NI=$1 billion billion Billions $ 195.2 18.8 11.8 59.4 14.4 52.1 13.9 16.5 40.5 2.2 219.1 0.0arrow_forward
- Using the incomes approach, calculate GDP at basic prices based on the numbers from this table: 1 Wages and salaries 2 3 4 Compensation of employees Net operating surplus: Corporations Gross mixed income 5 Taxes less subsidies on production Net mixed income 7 Taxes less subsidies on products and imports 8 67 6 9 10 11 12 Consumption of fixed capital: Unincorporated businesses Consumption of fixed capital: General government and NPISH Gross operating surplus Employers' social contributions Consumption of fixed capital: Corporations $3545 $3600 $3680 $3725 A value greater than $3725 1800 2000 550 600 45 570 80 30 50 1000 200 400arrow_forwardYou are given the following data. Calculate GNP and GDP at factor cost. GNPMP 600 Indirect Taxes 50 Subsidies 30 NFIA 100 Depreciation 50 Transfer payments 15 Retained Earnings of Companies 25 Personal Taxes 15 Personal Savings 80arrow_forwardThe gross domestic product (GDP) of the United States is defined as the all in a given period of time. Based on this definition, indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in 2023. Scenario Generic Motor Company, a U.S. automobile company, produces a pickup truck at a manufacturing facility in Lordstown on January 6, 2023. It sells the car at a dealership in Dallas on February 2, 2023. Graincorp, a U.S. agricultural company, produces corn syrup at a plant in Iowa on September 25, 2023. It sells the corn syrup to Crunchy's for use in the production of cereal that will be made in the United States in 2023. (Note: Focus exclusively on whether production of the corn syrup increases GDP directly, and ignore the effect of production of the cereal on GDP.) Using wood from a red maple tree on your Michigan property you make a birdhouse in 2023. A similar birdhouse sells for $55 in a craft store. Sleepytown, a…arrow_forward
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