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Question 3. GDP by expenditure and by income method (a) You have the following data from the national accounts: the private consumption is 8, the public spending 4, the sales tax is 2, the investment exceeded the depreciation threefold, 9 to 3, the wage income was 12. However, $1 of the national income came in net factor income from abroad. Imports exceeded exports by $2. Find the capital income in the economy.

Question 3. GDP by expenditure and by income method (a) You have the following data from the national accounts: the private consumption is 8, the public spending 4, the sales tax is 2, the investment exceeded the depreciation threefold, 9 to 3, the wage income was 12. However, $1 of the national income came in net factor income from abroad. Imports exceeded exports by $2. Find the capital income in the economy.

ECON MACRO
ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter6: Tracking The U.s. Economy
Section: Chapter Questions
Problem 1.2P
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Question 3. GDP by expenditure and by income method (a) You have the following data from the national accounts: the private consumption is 8, the public spending 4, the sales tax is 2, the investment exceeded the depreciation threefold, 9 to 3, the wage income was 12. However, $1 of the national income came in net factor income from abroad. Imports exceeded exports by $2. Find the capital income in the economy. (b) Among the US, Europe, and China, which is the above economy representative of? Explain why. (c) Suppose BEA forecasted the US expenditure based on the assumption that the government will buy American-made buses. How will the expenditure change if the government buys Chinese-made buses instead? How will the government spending change? How will consumption change?
Transcribed Image Text:Question 3. GDP by expenditure and by income method (a) You have the following data from the national accounts: the private consumption is 8, the public spending 4, the sales tax is 2, the investment exceeded the depreciation threefold, 9 to 3, the wage income was 12. However, $1 of the national income came in net factor income from abroad. Imports exceeded exports by $2. Find the capital income in the economy. (b) Among the US, Europe, and China, which is the above economy representative of? Explain why. (c) Suppose BEA forecasted the US expenditure based on the assumption that the government will buy American-made buses. How will the expenditure change if the government buys Chinese-made buses instead? How will the government spending change? How will consumption change?
Expert Solution
Step 1

GDP Calculation through expenditure method :  GDP = C +  I + G + NX 

GDP calculation through income method :  GDP=  Wages +  Net Factor income from abroad 

 

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