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Assignment #1: Macroeconomics 1020
Chapter 20: Pg. 487 #3, 10, 12, 13, 27
3. In the diagram of question 3, flow B represents consumption expenditure, flow C represents Government expenditure on goods and services, flow D represents investment, and flow E represents the net exports of goods and services.
a) aggregate income = aggregate expenditure
= C + I+ G + (X β M)
= (900 billion) + (300 billion) + (200 billion) + (-70 billion)
= 1330 billion
The value of aggregate income will be $1330 billion.
b) Aggregate income = aggregate expenditure = GDP. Therefore, the value of GDP will be $1330 billion as well.
10. Y = C + I + G + (X β M)
=( $2000) + ($800) + ($400) + (-$200)
= $3000
GDP = net domestic income at factor cost + Indirect taxes less subsides + depreciation
GDP βnet domestic income at factor cost β indirect taxes less subsides = depreciation
$2900 - $2500 -$100 = $300
Therefore the GDP calculated through the expenditure approach is $1330 billion. The value of the depreciation is $300.
12. Nominal GDP in 2010:
(quantity of bananas x price of bananas in 2010)+(quantity of coconuts x price of coconuts in 2010)=GDP
(800 x $2) + (400 x $10) =
($1600) + ($4000) =
$5600 is the nominal GDP value in 2010.
Nominal GDP in 2011:
(quantity of bananas x price of bananas in 2011)+(quantity of coconuts x price of coconuts in 2011)=GDP
(900 x $4 ) + (500 x $5) =
($3600) + ($2500) =
$6100 is the nominal GDP value in 2011.
13. Real GDP of 2011 expressed in base year (2010) prices:
(# of bananas x price of bananas in 2010)+(# of coconuts x price of coconuts in 2010)=real GDP
(900 x $2) + (500 x $10)=
($1800) + ($5000) =
$6800 is the real GDP of 2011 expressed in base year (2010) prices.
27.
GDP = wages paid to labour + interest + profit + rents
= ($800) + ($340)
=$1140 is the GDP of Xanadu in 2012.
Chapter 22: Page 539 #1, 7, 8, 23
1.
a) real GDP growth rate = (real GDP in current year-real GDP in previous year)/(real...