Question

Questions 1-5 Beta's National Accounts in 2019 1. Net Domestic Product 2. Exports 3. Personal income taxes 4. Government expenditures 5. Consumption expenditures 6. Gross investment 7. Imports 8. Corporate profits before taxes 9. Personal disposable Income 10. Net Investment 11. Capital stock on January 1, 2019 Billions of $ 2250 100 300 600 1400 250 75 350 1900 225 30000 1. GDP was a) $2175 billion b) $2275 C) $2300 d) $2325. Depreciation was a) So billion b) $25 c ) $50 d) $125. Personal income was a) $1975 b) $2115 c) $2200 d) $2,340. Personal savings were a) $250 b) $400 c) $450 d) $500. The stock of capital on December 31, 2019 was a) $29,675 b) $30,000 c) $30,225 d) $30,250. Questions 6 to 12 Biga's Economic Data 2016 2017 650 680 2018 705 2019 730 680 D = ? F = ? Actual GDP ($ Billions) Actual GDP growth rate (%) Real GDP ($ Billions) Real GDP growth rate (%) GDP Price Deflator Rate of inflation (%) B = ? C = ? 97 A = ? 102 E = ? 3.093% 6. The GDP Deflator in cell A (1st decimal; no rounding) is a) 94.8 b) 95.2 c) 95.5 d) 98.6

Answer 1

First we solved the second multiple choice question because we want depreciaton amount to calculate GDP in first MCQ.

2). Gross investment refers to the total expenditure on buying capital goods over a specific period of time without considering depreciation. On the other hand, Net investment considers depreciations and is calculated by subtracting depreciation from gross investment. Therefore, we can write as;

Net Investment = Gross Investment - Depreciation

or Depreciation = Gross Investment - Net Investment

or Depreciation = $250 - $225 = $25.

The depreciation amount is $25billion. So the right option is (b).

1) Gross domestic product (GDP) refers to the value of goods and services produced within a country over a specific period of time considering depreciation, while National domestic product (NDP) refers to the value of goods and services produced within a country over a specific period of time considering depreciation. So the deference between GDP and NDP is depreciation, calculated above in 2nd MCQ, i.e;

GDP = NDP + Depreciation

GDP = $2250 + $25 = $2275

The calculated Gross domestic product (GDP) is $2275billion. So the right option is (b).

3) We know that personal disposable income is the income left behind for personal use after paying the taxes. In other words personal disposable income is total personal income minus personal current taxes. So we can write as

Personal Disposable Income = Personal Income - Personal Income Taxes.

We are given Pesonal disposable income as $1900 and personal income tax as $300. Therefore, we can calculate personal income from below formula as;

Personal Disposable Income = Personal Income - Personal Income Taxes

Personal Income = Personal Disposable Income + Personal Income Taxes

Personal Income = $1900 + $300 = $2200

The calculated personal income is $2200billion. So the correct option is (c).

4). Personal saving refers to the money left bebind after all consumption and investement ependitures are done by the households from disposable income. It is just the difference between personal disposable income and consumption expenditure. So we can calculate personal saving as;

Personal Saving = Personal Disposable income - Consumption Expenditure

Personal Saving = $1900 - $1400 = $500.

The calculated personal saving is $500billion. So the correct option is (d).