Macro Economics

National Income Accounting

Q no.1
Rs. Exports Government purchases Net foreign factor income earned in the countr 'onsumption $personal% Gross saving *ividends paid b companies Indirect business taxes Imports 23 147 1! 343 (4 3( 4) 1( Personal income Interest on public debt Private"sector investment in e#uipment and construction $gross% 'orporate profits 'onsumption of fixed capital 'hange in private"sector inventories 'orporate saving Personal taxes Rs. 417 33 7& 2( )! 3 12 (3

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 ,ndistributed profits

Net foreign factor income .ther income not paid

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

CC P
Rs. 2! Indirect taxes 2!! +ransfer pa ments Personal taxes 3 1 'orporate profit taxes Net Investment

Rs. 3! 4! & 22 1-

Q no.3
Rs.
Consumption 3,000 Government spending 1,200 Imports 450 Factor income received rom rest o !or"d 230 #a$ments o !or"d actor income to rest o 220 Depreciation 580 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 0ocial securit taxes Net investment 'orporate retained earnings Required:Calculate the GDP, NDP and NIfc. Find Depreciation and Net export . 3/7-! )7! 1/1!! 4!! 17! 3Indirect business taxes 'orporate income taxes Personal income taxes Gross investment Imports Government transfer pa ments to households Rs. 44! 137!! (!! 71! ))!

Q no.5
Rs. Personal +axes 0ocial 0ecutit 'ontributions Indirect 1usinesss +axes +ransfer pa ments ,202 Exports 'orporate Income +axes 4! 12! 4! 22 24 1! ,ndistributed corporate profits Government Purchases Gross Private *omestic Investment ,202 Imports Personal 'onsumption Expenditures Net Private domestic investment Rs. 3&! 722 2-! -!

Net 3oreign 3actor Income Earned in the ,2 0

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

An "er

#. GDP % 5&&, GNP % 5'&, NNP % 50&, NIfc % 4'1, DI % 334 $. GDP % 208, GNP % 205, NIfc % 1&0, PI % 1(5, DI % 1&3 %. GDP % 5250, GNP % 52'0, NNP % 4'80, NIfc % 4240, DI % 41(0 &. GDP % 5'10, NDP % 4(80, NIfc % 4540, Depreciation % '30, Net 'xport % )40 (. GDP % 41&, GNP % 40&, NDP % 3(2, NIfc % 3'2, PI % 2(4, DI % 254

CC P
)ultiplier

Q no.1

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Macro Economics
Suppose that the economy is characterized by the following beha ioral e!uations" # $ 1%& ' &.% () * $ 15& + $ 15& , $ 1&& a2 0olve for e#uilibrium G*P $4%/ *isposable income $4*%/ 'onsumption 5 0aving6 b2 7ssume that G is no8 e#ual to 11!2 0olve for e#uilibrium output2 c2 7ssume that 4e no8 12!!/ 8hat is change in I or +6

Q no.2
#onsider the following e!uations describing an economy- where ( is real output- # is consumption- * is in estment(d is disposable *ncome- + is go ernment spending- and , is ta.es. /or simplicity- let 0 1net e.ports2 be zero. # $ 1&& ' &.3(d- * $ 5&&- + $ %&&- , $ &.25 (. a2 9hat is the e#uilibrium level of income6 b2 If Investment falls b 2!!/ 8hat is the change in e#uilibrium income6 c2 If G rise b 1!!/ 8hat is the change in e#uilibrium income6

Q no.3
*f 4dnan recei es 51&&& from his newly created +o t. 6ob and gi es 57&& to 4li for writing him a speech- and then 4li gi es 531& to 8umail for installing a computer system- assuming e eryone else in the nation has the same spending pattern" a2 :o8 much is the multiplier6 b2 If ;1! billion of ne8 investment had been made/ b ho8 much 8ould our G*P rise6

Q no.4
( $ #'*'+ 112 #$#&'c1(9,2 122 ,$,& 132 *$*& 142 +$+& 152 :hat is (e if ,&$12.5- +&$12.5- *&$2&- #&$2.5 and c$&.3; a2 9hat is the flo8 of saving6 b2 *erive the Investment/ Government and +ax <ultipliers6 c2 9hat is 4e if Investment/ Government and +ax double6 d2 If 4e is no8 2!!2:o8 much change in G or +6 e2 Prove I=G > 0=+ No8 replace $3% 8ith +>!2142 ?epeat #uestions a% b% c% d% and e%2

Q no.5
C G I T = = = =

($#'*'+

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

@etAs tr changing the level of government spending2 0ee if ou can solve for e#uilibrium levels of 4/ 4d/ '/ and 0 for each of these different levels of government spending2 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 'alculate the change in e#uilibrium income in all above cases2

CC P
(e $ 3&&& # $ 225& S $ 35&

G = 500

I = 250 T = 400

Q no.%
($#'*'+

C G I T

= = = =

400 + .9(Y - T) 300 250 0.1Y

12 If e#uilibrium Income is -!!! then 'alculate saving2 22 Prove i. Y = C + I + G ii. # ' * ' + $ # ' S ' ,

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