Use the following data to answer the questions below Consump

Use the following data to answer the questions below Consumption Depreciation Retained earnings Gross investment Imports Exports $200 billion 20 12 40 70 50 10 80 et foreign factor income overnment purchases Instructions: Enter your responses rounded to the nearest whole number (a) How much is GDP? 300 billion (b) How much is net investment? 20 billion (c) How much is national income? 290 billion

Solution

a). GDP = Consumption expenditure + Government purchases + Gross investment + Exports - Imports.

= 200 Billion + 80 Billion + 40 Billion + 50 Billion - 70 Billion

= $ 300 Billion.

Conclusion :- GDP = $ 300 Billion.

(b). Net investment = Gross investment - Depreciation.

= 40 Billion - 20 Billion

= $ 20 Billion.

Conclusion :- Net investment = $ 20 Billion.

(c). National income = GDP - Depreciation + Net foreign factor income.

= 300 Billion - 20 Billion + 10 Billion

= $ 290 Billion

Conclusion :- National income = $ 290 Billion.

(d). (i). Real GDP would not change.

(d). (ii). Nominal GDP would double