ECON 1020 Lecture 18: Lecture 18

33 views3 pages

erinchimpanzee657

17 May 2017

School

University of Manitoba

Department

Economics

Course

ECON 1020

Professor

Ryan A.Compton

For unlimited access to Class Notes, a Class+ subscription is required.

violetturtle181 and 7 others unlocked

ECON 1020 Full Course Notes

Verified Note

14 documents

Document Summary

Two ways of calculating gdp: expenditures and income: The expenditures and income approaches are two ways of looking at the same thing: what is spent on making a product is income to those who helped to make it. Expenditures approach: the method to measure gdp that adds up all the expenditures made for final goods and services. The expenditures approach adds up: personal consumption expenditure (c) o gross investment (ig, government purchases (g) Net exports (xn) = exports (x) imports (m) Income approach: the method to measure gdp that adds up all the income generated by the production of final goods and services. Buying (spending money) and selling (receiving income) are two aspects of the same transaction. On the expenditures side of gdp, all final goods produced by the economy are bought either by three domestic sectors (households, businesses, and government) or by buyers abroad.

Related Questions

Question 1 Gross domestic product (GDP) measures the economy's production of

A) final goods and services.

B) intermediate goods.

C) consumer goods and services.

D) capital goods.

Question 2 Because GDP is measured in dollars per year, GDP is called a

A) stock.

B) flow.

C) cycle.

D) chain.

Question 3 Which of the following would not be included in the gross private domestic investment (I) category of GDP?

A) A retailer's additions to its inventories.

B) A bakery's purchase of a new oven.

C) A trader's purchase on NASDAQ stocks.

D) Newly built residential construction.

Question 4 Which of the following government payments would be included in the government consumption expenditures and gross investment (G) category of GDP?

A) A firefighter's monthly paycheck.

B) A retired grandmother's Social Security check.

C) A retired colonel's veteran's benefits.

D) A laid-off auto worker's unemployment conpensation check.

Question 5 The largest component in the income approach to measuring GDP is

A) compensation of employees.

B) rents.

C) profits.

D) net interest.

Question 6 Which approach to calculating GDP attempts to measure employee compensation, rents, profits, and net interest?

A) The circular-flow approach.

B) The product-market approach.

C) The income approach.

D) The expenditure approach.

Question 7 In recent years, people have benefited from greater amounts of leisure time. This trend

A) has caused GDP to rise.

B) has caused GDP to fall.

C) made GDP fluctuate randomly.

D) is not accounted for in the GDP statistic.

Question 8 National income (NI) is calculated by adjusting GDP for

A) depreciation of capital.

B) investment and net exports.

C) Social Security insurance contributions and transfer payments.

D) corporate and personal income taxes.

Question 9 If an economy's real GDP has increased, we can conclude that the economy

A) is inflationary.

B) has increased its production.

C) suffers from recession.

D) needs a tax cut.

Question 10 In the circular flow model, investment, government spending, and exports are classified as

A) injections.

B) leakages.

C) transfers.

D) consumption expenditures.

To the right is a list of domestic output and national income figures for a certain year. All figures are in billions. The questions that follow ask you to determine the major national income measures by both the expenditures and the income approaches. The results you obtain with the different methods should be the same.

1. compensation of employees- $194.2
2. U.S exports of goods and services- $17.8
3. consumption of fixed capital- $11.8
4. government purchases- $59.4
5. taxes on production and imports- $14.4
6. net private domestic investment- $52.1
7. transfer payments- $13.9
8. U.S imports of goods and services- $16.5
9. personal taxes- $40.5
10. net foreign factor income- $2.2
11. personal consumption expenditures- $219.1
12. statistical discrepancy- $0

a. Using the above data, determine GDP by both the expenditures and the income approaches. Then determine NDP.

b. Now determine NI in two ways: first, by making the required additions or subtractions from NDP; and second, by adding up the types of income and taxes that make up NI.

c. Adjust NI (from part b) as required to obtain PI.

d. Adjust PI (from part c) as required to obtain DI.

jadehedgehog412

Using the following national income accounting data, compute (a) GDP, (b) NDP, and (c) NI. All figures are in billions. Category Value Compensation of employees $196.2; U.S. exports of goods and services 19.8; Consumption of fixed capital 11.8; Government purchases 59.4; Taxes on production and imports 14.4; Net private domestic investment 52.1; Transfer payments 13.9; U.S. imports of goods and services 16.5; Personal taxes 40.5; Net foreign income 2.2; Personal consumption expenditures 219.1; Statistical discrepancy 0.0;

Instructions: Round your answers to one decimal place.

a. GDP = $ billion

b. NDP = $ billion

c. National Income = $ billion

amethystsnail733

ECON 1020 Lecture 18: Lecture 18

ECON 1020 Full Course Notes

Document Summary

Get access

Related Documents

ECON 1020 Lecture Notes - Lecture 9: Buckminsterfullerene

ECON 1020 Lecture Notes - Lecture 21: Xm Satellite Radio, Gross Domestic Product

ECON 1020 Lecture Notes - Lecture 63: Keynesian Cross, Autarky, Price Level

Related Questions