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What is the value of the gdp

Assignment Help Macroeconomics
Reference no: EM132600910

The following is the information about an economy Car Manufacturing & Car Dealer.

Local households own this firm.

  • Sales of cars to foreign households: $8 M
  • Sales of trucks to local firms: $2 M
  • Sales of cars to local households: $15 M
  • Purchase of car parts (imported): $9 M
  • Wages paid to local households: $5 M
  • Dividend payments: $8 M
  • Purchase of on-line advertising services: $2 M
  • Purchase of assembly-line robots (imported): $1 M

Tech Company. Foreign households own this firm.

  • Sales of online advertising services to local firms & government: $3 M
  • Sales of subscription-based online food ordering services to local firms: $2 M
  • Sales of subscription-based streaming service to local households: $7 M
  • Wages paid to local households: $3 M
  • Interest payments to foreign bank: $4 M
  • Purchase of a new software (imported): $3 M
  • Dividend payments: $2 M

Restaurant. Domestic households own this firm.

  • Sales of meals to local households: $28 M
  • Purchase of trucks: $2 M
  • Sales taxes: $11 M
  • Purchase of subscription-based online food ordering services: $2 M
  • Purchase of bacon (imported): $2 M
  • Purchase of pasta (imported): $1 M
  • Wages paid to local households: $10 M

Government: Defense Services

  • Wages paid to local households: $10 M
  • Purchase of on-line advertising services for recruitment purposes: $1 M

Answer the following

(a) Determine GDP using the production approach.

i. What is value added of the Car Manufacturing Plant?

ii. What is the value added of the Tech Company?

iii. What is the value added of the Restaurant?

iv. What is the value added of the Government?

v. Based on the previous calculations, what is the value of the GDP?

(b)Determine GDP using the expenditure approach.

i. What is the value of consumer expenditures?

ii. What is the value of investment?

iii. What is the value of government spending?

iv. What is the value of net exports?

v. Based on the previous calculations, what is the value of the GDP?

(c) Determine GDP using the income approach.

i. What is the value of wage and salary income?

ii. What is value of net operating surplus?

iii. What is the value of depreciation?

iv. What is the value of indirect business taxes?

v. Based on the previous calculations, what is the value of the GDP?

(B) How are GDP and GNP related? What is the GNP of the economy described above?

Reference no: EM132600910

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