Question

The following is a list of an economy’s National Income Account data for a particular year (in billions of dollars). Government Transfer Payments: $16 Rents: 16 Income Receipts from Rest of the World 37 Exports: 24 Income Payments to Rest of the World 45 Corporate Profits: 88 Government Purchases Of Goods & Services: 69 Interest Income: 19 Personal Income Taxes: 38 Dividends: 23 Corporate Income Taxes: 28 Imports: 17 Indirect Business Taxes: 12 Proprietors’ Income: 25 Payroll Taxes: 21 Undistributed Corporate Profits: 19 Wages & Salaries: 230 Personal Consumption Expenditures: 267 Depreciation (Capital Consumption Allowance): 14 Net Private Domestic Investment: 47

Calculate GDP, GNP, NNP, National Income, Personal Income and Disposable Personal Income. You should be able to compute GDP using both the expenditures approach and the income approach

Using the following data, calculate GDP, GNP and NNP by both the expenditure approach and the income approach (dollars in billions). Indirect Business Taxes: $217.5 Net Exports: 23.3 Personal Consumption Expenditures: 2,672.8 Corporate Profits: 680.7 Gross Private Domestic Investment: 895.3 Interest Income: 279.8 Government Purchases of Goods & Services: 934.7 Proprietors’ Income: 130.6 Depreciation/Capital Consumption Allowance: 287.2 Rents: 33.8 Wages & Salaries: 2,896.5 Income Receipts from Rest of the World 247.1 Income Payments to Rest of the World 188.9

By the way, what is Net Investment for this economy?

Price Index Problem: The following table gives information about weekly per capita food consumption and food prices in Russia before and after the 1917 Communist Revolution. Taking 1913 as the base year, calculate a Food Price Index for 1928 and 1940. Average weekly wages for the years covered in the table were 6 rubles in 1913, 14 rubles in 1928 and 83 rubles in 1940. Using the Food Price Indexes you have just calculated, assess what happened to the real wages of Russian workers between 1913 and 1940. Food prices in Russia before and after the 1917 Revolution (in rubles per kilogram, except milk in liters and eggs in units)

Foodstuffs consumed weekly Price Price Price in Moscow in 1926 Quantity 1913 1928 1940 Black Bread 2.46 kgs 0.07 0.08 0.85 Wheat flour 0.79 kgs 0.12 0.22 2.90 Potatoes 3.04 kgs 0.05 0.09 1.20 Beef 0.92 kgs 0.46 0.87 12.00 Mutton 0.17 kgs 0.34 0.79 14.00 Sugar 0.45 kgs 0.34 0.62 3.80 Milk 1.24 ltrs 0.11 0.06 2.10 Butter 0.11 kgs 1.15 2.43 17.50 Eggs 1.60 eggs 0.13 0.20 0.85 Sunflower oil 0.12 kgs 0.15 0.53 15.65

Find the proportions of consumption spending and investment spending in US GDP. What proportion of US GDP is comprised of wages. The information can be found at the BEA website. 6.

US manufacturing output roughly doubled in the past twenty-five years, but that higher output is produced with 1/3 fewer workers. How much has productivity increased in US manufacturing over the past twenty-five years?

Answer 1

Calculation of NDP at Factor cost through income method:

NDP at Factor cost = Compensation of Employee's+ Operating Surplus+ Mixed Income

= wages and salary+ rent+interest income+ corporate profit+ proprietor's income

= 2896.5+33.8+279.8+680.7+130.6

=4021.4$

From Net domestic product at factor cost we get the following:

A) Gross Domestic product at Factor Cost= Net Domestic product at factor cost + depreciation

= 4021.4+287.2

= 4308.6$

B) Gross National Product at factor cost= GDP+ NFIA

= 4308.6+(247.1-188.9)

= 4308.6+58.2

= 4366.8$

C)National Income= GNP at factor cost- depreciation

= 4366.8 - 287.2

= 4079.6$

Calculation of NDP at factor cost through expenditure method:

Gross Domestic Product at Market Price= PFCE+ GFCE+ GDCF+Net Exports

= personal consumption expenditures+ Government purchase of goods and services+ Gross private domestic investment+ net exports

= 2672.8+934.7+895.3+23.3

= 4526.1$

We get GNP as follows

GNP at factor cost= GDP at market price - NIT( indirect taxes)

= 4526.1-217.5

= 4308.6$

As we have calculated before we calculate GNP and National income.