Macro Economics

National Income Accounting

Q no.1
Rs. Exports Government purchases Net foreign factor income earned in the country Consumption (personal) Gross saving Dividends paid by companies Indirect business taxes Imports 23 147 10 343 84 38 46 18 Personal income Interest on public debt Private-sector investment in equipment and construction (gross) Corporate profits Consumption of fixed capital Change in private-sector inventories Corporate saving Personal taxes Rs. 417 33 79 28 60 3 12 83

Required:Calculate the GDP by expenditure approach then find the value of GNP, NNP, NI fc, and DPI.

Q no.2

Gross investment

Net national product Undistributed profits

Net foreign factor income Other income not paid

Required:Calculate the GDP, GNP, NIfc, PI and DPI.

CC P
Rs. 20 Indirect taxes 200 Transfer payments Personal taxes 3 5 1 Corporate profit taxes Net Investment

Rs. 30 40 9 22 15

Q no.3
Rs.
Consumption 3,000 Government spending 1,200 Imports 450 Factor income received from rest of world 230 Payments of factor income to rest of world Depreciation 580 220 Exports 400 Investment 1,100

Rs.

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Macro Economics

Indirect business taxes and subsidies

440

Direct taxes

50

Required:Calculate the GDP, GNP, NNP, NIfc, PI and DPI.

CC P
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Macro Economics

Q no.4
Rs. Expenditures for consumer goods and services Exports Government purchases of goods and services Social security taxes Net investment Corporate retained earnings Required:Calculate the GDP, NDP and NIfc. Find Depreciation and Net exports. 3,750 670 1,100 400 170 35 Indirect business taxes Corporate income taxes Personal income taxes Gross investment Imports Government transfer payments to households Rs. 440 135 700 800 710 660

Q no.5
Rs. Personal Taxes Social Secutity Contributions Indirect Businesss Taxes Transfer payments U.S. Exports Corporate Income Taxes 40 15 20 40 22 24 10 Undistributed corporate profits Government Purchases Gross Private Domestic Investment U.S. Imports Personal Consumption Expenditures Net Private domestic investment Rs. 35 90 75 22 250 50

Net Foreign Factor Income Earned in the U. S

Required:Calculate GDP &GNP expenditure approach and find NDP, NI, PI, DI.

Answers

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

CC P
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 T0=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
C G I T = = = =

Y=C+I+G

300 + .75(Y - T) 500 250 400

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. Raise G by 200, to 700 2. Raise G by 100, to 600 3. Cut G by 100, to 400 4. Cut G by 200, to 300 Calculate the change in equilibrium income in all above cases.

CC P
Ye = 3000 C = 2250 S = 350

G = 500

I = 250 T = 400

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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