Question

If during 2011, the country of Sildavia recorded a GDP of $65 billion, interest payments of $15 billion, imports of $13 billion, profits of $7 billion, exports of $15 billion, and rent of $7 billion, wages during 2011 in Sildavia were:

A) $36 billion.
B) $38 billion.
C) $51 billion.
D) $64 billion.

Answer 1

Answer: $36 billion

Explanation: In this scenario the total national income formula is manipulated so that the wages figure is deduced. Total national income, also known as gross national income (GNI), is the total amount of cash earned by a country's businesses and individuals. It also forms part of the gross domestic product (GDP) formula. It is cacluated as follows:

Total national income = rent + interest + profits + wages

Total national income forms a part of the GDP formula in the following way:

GDP = Total national income + net foreign factor income + sales taxes + depreciation

Because none of the other GDP figures have been given, they fall away in this scenario. This means that when manipulated so that the wages figure is deducted, the final answer is as follows:

65 billion (GDP) = $7 billion (rent) + $15 billion (interest) + $7 billion (profits) + wages

∴Wages = $65 billion (GDP) - $7 billion (rent) - $15 billion (interest) - $7 billion (profits)

= $36 billion