8 If GDP is 10400 NDP is 9100 and gross private domestic inv

8

If GDP is $10,400, NDP is $9,100, and gross private domestic investment is $1,600 (all numbers are in billions of dollars), then we can conclude that

net private domestic investment is $300

A)

the GDP-deflator is roughly 114

B)

the addition to the capital stock is $1,600 billion

C)

all of the above

D)

Solution

Ans:

Option A

net private domestic investment is $300

analysis

Net domestic product (NDP) = gross domestic product (GDP) - depreciation

Depreciation = gross domestic product (GDP) - Net domestic product (NDP)

                       = $10,400 billion- $9,100 billion

                      = $1300 billion

net private domestic investment = gross private domestic investment - depreciation

                                                   = $1600 billion - $1300 billion

                                                   = $300 billion.