- Purchases of stocks and bonds to you, the future economist, are not considered investments. Explain if this statement is true or false. Why are stock and bond purchases excluded from GDP accounts?
- The GDP (in nominal terms) for Australia is $1,500.26 billion, while that of Brazil is $2,138.92 billion. Given that GDP is a measure of what is produced in a country, and is used to evaluate well-being in a country, are Brazilians better off than Australians? Explain your answer. One word answer is not enough. (Data from http://statisticstimes.com/economy/projected-world-gdp-ranking.php)
- Calculate all six of the national income accounts.
Personal consumption expenditures $ 1,750
Federal government purchases of goods and services 351
State and local government’s purchases 331
Gross private domestic investment 412
Proprietors’ income 150
Compensation of employees/wages 1,851
Corporate profits after taxes 188
Corporate profit taxes 23
Rental income 346
Depreciation 295
Indirect business taxes (taxes on production and imports) 146
Net interest 147
Exports 299
Imports 375
Undistributed corporate profits/retained earnings 111
Transfer payments 66
Personal income taxes 72
Social Security taxes (Social Insurance taxes) 222
Statistical discrepancy 15
Net factor earnings from abroad 100
Follow the formulas in table 6.2 and 6.3 or follow the example in the first document posted in this folder - and calculate the national income accounts for the country above. (Calculate GDP, GNP, NNP, NI, PI and DI). SEE ATTACHED DOCUMENT FOR THIS QUESTIONqu
Complete the assignment from the expenditure side.
(Hints: don’t forget government expenditures include all levels of government expenditures. If you complete the calculations from the income side: Add to Corporate profits = corp. profits before taxes (includes corporate profits after taxes+ corporate taxes); proprietors’ income should be included in income from the income side, if the data is given separately).
Each category should only be used once in the calculations.)