Question

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Governments © Goods 1. During 2019 in Reslands, flow A was $13.0 trillion, flow B was $9.1 trillion, flow D was $3.3 trillion, and flow E was -50.8 trillion. Calculate (1) GDP and (ii) Government spending in Reslands .Y= 13 to t 9.1 + G + (-0.8) In 2019, flow A in Miau was $1000 billion, flow C was $250 billion, flow B was S650 billion, and flow E was $50 billion. Calculate Miau gross private domestic investment. 3. In 2019, Costa Ipustria flow D was $2.0 trillion, flow E was -$1 trillion, flow A was $10 trillion, and flow C was $4 trillion. Calculate personal consumption expenditure for this country Show your work attach additional pages if necessary.

Answer 1

ANSWER:

Question 1

(i)

Flow A represents total factor income paid by firms to households.

Total factor income is equal to GDP.

Flow A is $13 trillion.

So,

The GDP is $13 trillion.

(ii)

Flow B represents personal consumption expenditure.

Flow D represents gross private domestic investment.

Flow E represents net exports

GDP = Personal consumption expenditure + Government spending + Gross private domestic investment + Net exports

$13 trillion = $9.1 trillion + Government spending + $3.3 trillion - $0.8 trillion

Government spending = $13 trillion + $0.8 trillion - $9.1 trillion - $3.3 trillion

Government spending = $1.4 trillion

Thus,

The government spending is $1.4 trillion.

Question 2

Flow A represents total factor income paid by firms to households.

Total factor income is equal to GDP.

Flow A is $1,000 billion.

So,

The GDP is $1,000 billion.

Flow C represents government spending

Flow B represents personal consumption expenditure

Flow E represents net exports

Calculate Gross private domestic investment -

Gross private domestic investment = GDP - personal consumption expenditure - government spending - net exports

Gross private domestic investment = $1,000 billion - $650 billion - $250 billion - $50 billion

Gross private domestic investment = $50 billion

Thus,

The gross private domestic investment is $50 billion.

Question 3

Flow A represents total factor income paid by firms to households.

Total factor income is equal to GDP.

Flow A is $10 trillion

So,

The GDP is $10 trillion

Flow C represents government spending

Flow D represents gross private domestic investment

Flow E represents net exports

Calculate the Personal consumption expenditure -

Personal consumption expenditure = GDP - Government spending - Gross private domestic investment - Net exports

Personal consumption expenditure = $10 trillion - $4 trillion - $2 trillion - (-$1 trillion) = $5 trillion

Thus,

The personal consumption expenditure is $5 trillion.