Question

Given the following macroeconomic information to answer the next question: Private Consumption spending 800 Interest paid on capital 100 Imports 200 Gross Investment spending 600 Factors income paid to abroad 120 Exports 110 Government spending 550 Depreciation 50 Government tax revenue 200 Factors income received from abroad 80 Calculate the following values:

1- GDP =
2- GNP =
3- Internal Balance =
4- Net factors income from abroad =

Answer 1

GDP is calculated as $1860 billion, GNP as $1820 billion, and Net factors income from abroad is -$40 billion. Internal Balance is a concept representing an economy's most efficient operating point and cannot be calculated without additional information.

Step-by-step explanation:

Calculation of GDP, GNP, Internal Balance, and Net Factors Income from Abroad

To calculate the Gross Domestic Product (GDP), we use the formula GDP = Consumption + Investment + Government spending + (Exports – Imports), which in this case is GDP = $800 + $600 + $550 + ($110 - $200). This simplifies to GDP = $1860 billion.

The Gross National Product (GNP) is calculated by adjusting the GDP for the net factors income from abroad, so GNP = GDP + Factors income received from abroad - Factors income paid to abroad, which becomes GNP = $1860 + $80 - $120, resulting in GNP = $1820 billion.

The Internal Balance is not a single figure but is the point where an economy is producing at its fullest capacity without causing inflation, and this cannot be determined from the given data alone.

The Net factors income from abroad is calculated as Net factors income from abroad = Factors income received from abroad - Factors income paid to abroad, yielding Net factors income from abroad = $80 - $120 = -$40 billion.