ECON332 Study Guide - Midterm Guide: The Foreign Exchange, Expected Return, Interest Rate

87 views6 pages

tancockroach82

10 Apr 2017

School

University of Waterloo

Department

Economics

Course

ECON332

Professor

Zara Liquat

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

The value of all fi(cid:374)al goods a(cid:374)d ser(cid:448)i(cid:272)es produ(cid:272)ed (cid:271)(cid:455) a (cid:374)atio(cid:374)"s fa(cid:272)tors of produ(cid:272)tio(cid:374) i(cid:374) a given time period. In an open economy, gnp equals the sum of consumption, investment, government purchases, and the current account. Open economy (open to trade) vs. closed economy (autarky) Gnp = c + i + g + ca. I expenditure by firms on buying buildings, equipment etc. Ca expenditure by foreigners on domestic goods (exports) minus the spending by locals on foreign goods (imports) Adjustments to gnp: depreciation- loss of income to capital owners due to wear and tear, depreciation is unbiased, unilateral transfers payments made to expatriate workers sent to their home countries, foreign aid, pension payments to expatriate workers. The final value of all goods and services that are produced within a country in a given time period. Gdp is equal to gnp minus net income from foreign countries for factors of production. Value of output (cid:449)ithi(cid:374) a (cid:272)ou(cid:374)tr(cid:455)"s (cid:271)orders.

Related Questions

Suppose an economyâs national accounts are GNP = 100, C = 70, I = 40, G = 20 and EX = 20 where GNP is gross national product, C is consumption, I is investment, G is government spending, and EX is exports. Using the national income identity, find the value of imports (IM). What is the current account balance? What is the (economy-wide) savings rate? What would the government, private, and total savings rate be if the government reduced taxes T = 10 while the other variables remain unchanged?

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

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

Personal consumption expenditures $295
Net foreign factor income 4
Transfer payments 12
Rents 14
Statistical discrepancy 8
Consumption of fixed capital (depreciation) 27
Social security contributions 20
Interest 13
Proprietors' income 33
Net exports 11
Dividends 16
Compensation of employees 273
Taxes on production and imports 18
Undistributed corporate profits 21
Personal taxes 26
Corporate income taxes 19
Corporate profits 56
Government purchases 72
Net private domestic investment 33
Personal saving 20

a.) Using the above data, determine GDP by both the expenditure and the income approaches and then determine NDP.

Instructions: Enter only whole numbers for your answers.

GDP, the expenditure approach: $___ billion

GDP, the income approach: $ ___billion

NDP: $ __ billion

b.) Now determine NI: first, by making the required additions and subtractions from GDP (Method 1), and second, by adding up the types of income and taxes that make up NI (Method 2).

Instructions: Enter only whole numbers for your answers.

Method 1:__ $ billion

Method 2:__ $ billion

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

Instructions: Enter only whole numbers for your answers.

Personal Income = $___ billion

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

Instructions: Enter a whole number for your answer.

Disposable Income = $_____ billion

viridianscorpion577

ECON332 Study Guide - Midterm Guide: The Foreign Exchange, Expected Return, Interest Rate

Document Summary

Get access

Related Documents

ECON332 Study Guide - Final Guide: Current Asset, Fax, U.S. Bancorp

ECON332 Chapter Notes - Chapter 2: International Monetary Fund, Dont, Net National Product

ECON332 Lecture Notes - Gross Domestic Product, The Foreign Exchange, Capital Account

Related Questions