Macro Economics
National Income Accounting Q no.1 Rs.
Exports
23
Governmentpurchases
147
Net foreign factor income earned in the country Consumption(personal)
343
Grosssaving
84
46
Imports
33
Private-sector investment in equipment and construction (gross)
79
Corporateprofits
28
Consumptionoffixedcapital
38
Indirectbusinesstaxes
417
Interestonpublicdebt
10
Dividendspaidbycompanies
Rs.
Personal income
60
Changeinprivate-sectorinventories
3
Corporatesaving
18
12
Personal taxes
83
Required:Calculate the GDP by expenditure approach then find the value of GNP, NNP, NI fc, and DPI.
Q no.2 Rs.
Gross investment Netnationalproduct
20
CC P 200
Netforeignfactorincome
3
Undistributed profits Other income not paid
Rs.
Indirect taxes
Transferpayments
40
Corporateprofittaxes
5
1
30 9
Personal taxes
Net Investment
22 15
Required:Calculate the GDP, GNP, NIfc, PI and DPI.
Q no.3
Rs.
Consumption
Rs.
Investment 3,000
Government spending
1,100 Exports
1,200 Imports
400 Depreciation
450 Factor income received from rest of world 230
580 Payments of factor income to rest of world
220
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Macro Economics Indirectbusinesstaxesandsubsidies
440
Directtaxes
50
Required:Calculate the GDP, GNP, NNP, NIfc, PI and DPI.
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Macro Economics
Q no.4 Rs.
Expenditures for consumer goods and services
3,750
Exports
670C
Governmentpurchasesofgoodsandservices
1,100
Socialsecuritytaxes
400
Net investment
Rs.
Indirect business taxes orporate income taxes
135
Personalincometaxes Grossinvestment
170
Imports
Corporate retained earnings
440
35
700 800 710
Government transfer payments to households
660
Required:Calculate the GDP, NDP and NIfc. Find Depreciation and Net exports.
Q no.5 Rs.
PersonalTaxes
40
Rs.
Undistributedcorporateprofits
35
SocialSecutityContributions
15
GovernmentPurchases
90
IndirectBusinesssTaxes
20
GrossPrivateDomesticInvestment
75
CorporateIncome Taxes
40
U.S. Imports
Transferpayments
22
PersonalConsumptionExpenditures
U.S.Exports
24
NetPrivatedomesticinvestment
Net Foreign Factor Income Earned in the U. S
10
22 250 50
Required:Calculate GDP &GNP expenditure approach and find NDP, NI, PI, DI.
Answers
CC P
1. GDP = 577, GNP = 567, NNP = 507, NIfc = 461, DI = 334 2. GDP = 208, GNP = 205, NIfc = 170, PI = 195, DI = 173 3. GDP = 5250, GNP = 5260, NNP = 4680, NIfc = 4240, DI = 4190 4. GDP = 5610, NDP = 4980, NIfc = 4540, Depreciation = 630, Net Exports = -40
5. GDP = 417, GNP = 407, NDP = 392, NIfc = 362, PI = 294, DI = 254
Multiplier Q no.1
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Macro Economics Suppose that the economy is characterized by the following behavioral equations: C = 160 + 0.6 YD I = 150 G = 150 T = 100 a. Solve for equilibrium GDP (Y), Disposable income (YD), Consumption & Saving? b. Assume that G is now equal to 110. Solve for equilibrium output. c. Assume that Ye now 1200, what is change in I or T?
Q no.2 Consider the following equations describing an economy, where Y is real output, C is consumption, I is investment, Yd is disposable Income, G is government spending, and T is taxes. For simplicity, let X (net exports) be zero. C = 100 + 0.8Yd, I = 500, G = 600, T = 0.25 Y. a. What is the equilibrium level of income? b. If Investment falls by 200, what is the change in equilibrium income? c. If G rise by 100, what is the change in equilibrium income?
Q no.3 If Adnan receives $1000 from his newly created Govt. job and gives $900 to Ali for writing him a speech, and then Ali gives $810 to Kumail for installing a computer system, assuming everyone else in the nation has the same spending pattern: a. How much is the multiplier? b. If $10 billion of new investment had been made, by how much would our GDP rise?
Q no.4 Y = C+I+G (1) C=C0+c(Y-T) (2) T=T0 (3) I=I0 (4) G=G0 (5) What is Ye if T 0=12.5, G0=12.5, I0=20, C0=2.5 and c=0.8? a. What is the flow of saving? b. Derive the Investment, Government and Tax Multipliers? c. What is Ye if Investment, Government and Tax double? d. If Ye is now 200.How much change in G or T? e. Prove I+G = S+T Now replace (3) with T=0.1Y. Repeat questions a) b) c) d) and e).
Q no.5 Y=C+I+G
Ye = 3000
CC P
C = 300 + .75(Y - T) G = 500 2=I5 0 4=T 00
C=2250
G = 500 2=I5 0 4=T 00
S=350
Let's try changing the level of government spending. See if you can solve for equilibrium levels of Y, Yd, C, and S for each of these different levels of government spending. 1. 2. 3. 4.
Raise G by 200, to 700 Raise G by 100, to 600 Cut G by 100, to 400 Cut G by 200, to 300
Calculate the change in equilibrium income in all above cases.
Q no.6 Y=C+I+G C G I T
= = = =
400 + .9(Y - T) 300 250 0.1Y
1. If equilibrium Income is 5000 then Calculate saving. 2. Prove i. Y = C + I + G ii. C + I + G = C + S + T
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