ECON 002 Lecture Notes - Lecture 1: Gross National Income, Government Spending
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Calculate the missing data.
Calculate missing data from the table.
| Income/Expenditure Flows | Amount (in billions) |
| Consumption expenditure | $7 |
| Government expenditure | $5 |
| Depreciation | $3 |
| Net taxes | $2 |
| Investment | $4 |
| Net exports | $1 |
| Expenditures | |
| Income | |
| GDP |
Calculate the following.
Using the data from a partial set of national income and expenditure data, address the following:
Calculate gross domestic product (GDP) using the expenditure approach.
Determine net domestic product, gross national product (GNP), and statistical discrepancy.
| Item | Amount in 2010 (in billions) |
| Government expenditure (G) = | $8 |
| Consumption expenditure (C) = | $20 |
| Investment (I) = | $5 |
| Net exports (NX) = | $1.5 |
| GDP (expenditure approach)= | |
| Total wages = | $21 |
| Net operating surplus = | $11 |
| Net domestic product = | |
| Indirect taxes minus subsidies = | $3.5 |
| Capital consumption = | $2 |
| GDP (income approach)= | |
| Statistical discrepancy = | |
| Net factor income from abroad = | $5.5 |
| GNP = |
Consider the tables.
Given production and price data below, address the following:
Calculate an economy's nominal GDP and real GDP.
In 2000:
| Item | Quantity (millions) | Price ($/unit) | Expenditure (millions of $) |
| Socks | 15 | 5 | 75 |
| SIM cards | 20 | 2 | 40 |
| Defense Budget | 9 | 5 | 45 |
Real/Nominal GDP = 160
In 2003:
| Item | Quantity (millions) | Price ($/unit) | Expenditure (millions of $) |
| Socks | 15 | 5 | 75 |
| SIM cards | 20 | 5 | 100 |
| Defense Budget | 20 | 10 | 200 |
Nominal GDP =
2003 Quantities valued at 2000 prices:
| Item | Quantity (millions) | Price ($/unit) | Expenditure (millions of $) |
| Socks | |||
| SIM cards | |||
| Defense Budget |
Real GDP =
Answer the following questions.
How do you measure GDP?
How do you measure real and nominal GDP?
How do you determine Consumer Price Index and what are its limitations?
Which of the following expenditures will be included in GDP which will be excluded from the calculation? Explain your answers.
Spare tires bought by Across America, a car rental company
Textbooks bought by college students
Cabinets purchased by a furniture store
A new car purchased by an NFL player
A cruise ship bought by Carnival