Question

5. Suppose a nation’s net domestic (national) product at factor cost equaled last year $ 5.500 billion. Indirect taxes minus subsidies equaled $450.00 billion, depreciation equaled $1,150 billion, and net operating surplus was $350 billion; the statistical discrepancy equaled zero. So the country’s GDP was:

1. $ 5,500 billion
2. $ 5,950 billion
3. $ 7,100 billion
4. $ 7,450 billion

Answer 1

5. C. $7,100 billion

NDPfc = GDPmp - Depreciation - Net indirect taxes ( Indirect taxes - subsides)

$5,500 billion = GDPmp - $1,150 billion - $450 billion

GDPmp = $5,500 billion + $1,150 billion + $ 450 billion

GDPmp = $7,100 billion

Hence, the country's GDP is $71,00 billion.