# Calculate the GDP by using the Expenditure Approach Method. Calculate the GDP by using the Factor Payment Approach or the Income Approach Method.

Assignment 2 Questions: Chapter 10 & 11 (10 Marks)

National income accounting deals with the aggregate measure of the outcome of economic activities. The most common measure of the aggregate production in an economy is Gross Domestic Product (GDP). The table below provides Country’s national income accounting. Use this data to answer the following questions.

 Transfer Payments \$ 54 Interest Income \$ 186 Depreciation \$ 36 Wages \$ 67 Gross Private Investment \$ 124 Business Profits \$ 274 Indirect Business Taxes \$ 74 Rental Income \$ 75 Net Exports \$ 18 Net Foreign Factor Income \$ 12 Government Purchases \$ 156 Household Consumption \$ 304

Calculate the GDP by using the Expenditure Approach Method (1Mark)

Calculate the GDP by using the Factor Payment Approach or the Income Approach Method. (1 Mark)

 Year Price of Pizza Quantity of Pizza Price of Burger Quantity of Burger Price of coffee Quantity of Coffee 2006 \$ 4 200 \$ 6 125 \$ 8 100 2007 \$ 6 350 \$ 8 200 \$ 9 175 2008 \$ 7 600 \$ 9 350 \$ 12 250

Suppose people consume 3 different goods. The following table shows the prices and quantities of each good consumed in 2006, 2007, and 2008.

Calculate nominal GDP in each of the three years. (1.5 Marks)

Calculate Real GDP in each of the three years, using 2006 as the base year. (1.5 Marks)

Calculate the rate of inflation for 2007 and 2008 using the GDP deflator as your price index. Assume that 2006 is still the base year. (2 Marks)

Using the quantities from 2006 for your market basket, and 2006 as your base year, calculate the CPI for 2006, 2007 and 2008. (2 Marks)

Using the CPI calculate the rate of inflation. (1 Mark

Calculate the GDP by using the Expenditure Approach Method. Calculate the GDP by using the Factor Payment Approach or the Income Approach Method.