Calculate nominal gdp in each of the three years

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Reference no: EM131520928

ASSIGNMENT: PRINCIPLES OF MACROECONOMICS

Question 1

A. Goto the Statistics Canada website and print thenominal/real GDP for at least 5years; Income and Expenditure Approach.Make sure that they are equal.

B. Comment briefly on the components of the Canadian GDP expenditure approach

Question 2:

The table below provides some national income figures. All figures are in millions of dollars.

Government purchases of goods and services    $58.5
Indirect taxes less subsidies                                                                             29.0
Personal income taxes                                                                                     41.5
Wages and employee compensation (including personal income taxes)     165.5
Interest on the public debt                                                                  15.5
Consumption expenditure                                                                   168.4
Exports                                                                                            90.9
Capital consumption allowance (depreciation)                                                     33.5
Imports                                                                                                         93.3
Gross investment                                                                                           67.2
Net interest income                                                                                         19.0
Statistical discrepancy (expenditure side)                                              0.2
Business profits before taxes                                                                           45.1
Statistical discrepancy (income side)                                                                  -0.2

Calculate the following values. (Show your calculations)

A. GDP from the income side
B. GDP from the expenditure side
C. Assuming that net payments to foreigners had been $8 million, calculate the value of GNP
D. Net domestic income at factor cost

Question 3

Consider the following statistics for a hypothetical lassies faire and closed economy (i.e., no government and no foreign trade.) All values reported are in real terms.

Income Y	Desired Consumption (C)	Desired Saving (S)	Desired Investment (I)	Desired Expenditure (AE)
200	200		100
	275	25	100
400		50	100
500	425		100
600		100	100
700	575		100
	600	150	100
900	725		100

A. Complete the table.

B. What is the value of the marginal propensity to consume? Marginal propensity to save? Marginal propensity to spend? Explain.

C. What is the equilibrium level of national income? Explain.

D. Do you detect any relationship between the desired saving, investment, and the equilibrium level of national income?

E. Suppose the desired investment spending drops to 50. What would happen to the equilibrium level of national income, consumption and saving? Explain.

F. Suppose the desired investment spending increases now to 150. What would happen to the equilibrium level of national income, consumption and saving? Explain.

Question 4

Assume that people only consume 3 different goods. The following table shows the prices and quantities of each good consumed in 2006, 2007, and 2008.

Year	Price of A	Quantity of A	Price of B	Quantity B	Price of C	Quantity C
2006	$6	300	$7	125	$9	100
2007	7	450	6	150	11	125
2008	8	800	5	175	14	150

A. Calculate nominal GDP in each of the three years.

B. Calculate Real GDP in each of the three years, using 2006 as the base year.

C. Using the real GDP figures calculated in (b) above, calculate annual growth rate of output for years 2007 and 2008.

D. Calculate the GDP deflator for each of the three years using 2006 as the base year.

E. Calculate the CPI (consumer price index) for 2006, 2007 and 2008 using 2006 as a base year.

F. Comment briefly on the movement of prices over the three years as indicated by CPI and GDP deflator.

Reference no: EM131520928

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