Question

1. The following data summarize the expenditures for the country of XYZ during 2015 in millions of alphabet, the currency of country XYZ. (5 point) Gross Private Domestic Investment $300 Business Fixed Investment $200 Change in Inventories $100 Exports $200 Imports $300 Personal Consumption Expenditures $900 Government Consumption Expenditures and $500 Statistical Discrepancy $20 Depreciation Expenditures $60

Gross Private Domestic Investment	$300
Business Fixed Investment	$200
Change in Inventories	$100
Exports	$200
Imports	$300
Personal Consumption Expenditures	$900
Government Consumption Expenditures and	$500
Statistical Discrepancy	$20
Depreciation Expenditures	$60

a. Calculate net exports

b. Calculate GDP

c. Calculate national income

d. Assume that the GDP deflator is 120 and calculate real GDP for 2015.

Answer 1

Solution:-

a) Calculation of net exports:

Net exports= Exports – Imports

                     = $200 - $300

                     = -$100

Therefore, the net exports are -$100.

b) Calculation of GDP

GDP= C+I+G+(X-M)

Where,

C= Consumption Expenditure

I = Gross Private Domestic Investment

G = Government Consumption Expenditures

X = Exports

M = Imports

GDP= $900 + $300 + $500 +($200-$300)

       = $1700 + (-$100)

         =$1700-$100

         =$1,600

Therefore, the GDP of country is $1600.

c) Calculation of National income

National income = GDP-Depreciation

                               =$1600-$60

                                =$1,540

Therefore, the National income of country is $1540

d) Calculate the real GDP of 2015

Real GDP = (Nominal GDP/GDP Deflator) * 100

                  =(1600/120)*100

                   =13.33*100

                   =1,333.33

Therefore, the Real GDP for year 2015 was $1,333.33