Question

Calculate GDP, NDP, NI, PI, and DI from the following information. All numbers are in billions of dollars. Wages $ 26,500 Consumption Expenditures $36,000 Government Expenditures $18,500 Imports $20,330 Exports $18,580 Property Taxes $16,000 Sales Taxes $9,715 Retained earnings $1,310 Personal Income Taxes $2,200 Private Domestic Investment Expenditures $15,650 Interest Income $1,940 Pay Roll taxes $1,300 Transfer Payments $880 Depreciation $1,300 Net Income Made Abroad by Americans $160 Indirect Business taxes $2,520 Corporate Income Taxes $320 2. Calculate a) labor force, b) labor force participation rate, and c) unemployment rate if the population of a country is 380 million people out which 92 million are under the age of 16, 58 million don't want to work and 20 million are looking for work. 3. Calculate the inflation rate from 2004-2005 if the index number in 2005 was 120 and the index number in 2004 was 135.

Answer 1

GDP = Consumption expenditure + Private Investment Expenditure + Government expenditure + Export - Import

= $36,000 + $15,650 + $18,500 + $18,580 - $20,330

= $68,400

NDP = GDP - Depreciation

= $68,400 - $1,300

= $67,100

NI = NDP - Indirect business tax - Transfer payment + Net income Made abroad by Americans

= $67,100 - $2,520 - $880 + $160

= $63,860

PI = NI - Corporate income tax - Retained earnings + Transfer payments

= $63,860 - $320 - $1,310 + $880

= $63,119

DI = PI - Personal income Taxes

= $63,119 - $2,200

= $60,910

a. Labor force = Total Population - (People under age of 16 + People who don’t work)

Labor force = $380 million - ($92 million + $58 million)

Labor force = $230 million.

b. Labor force participation rate = Labor force/ Total population

Labor force participation rate = (60/100) * 100

Labor force participation rate = 60%

c. Unemployment rate = (Unemployed / Labor force) * 100

Unemployment rate = ($20 million / $230 million) * 100

Unemployment rate = 8.69%