macroecon hw 2

# Macroecon hw 2 - Jason Frankel Macroeconomics Homework 2 February 3 2010 2 i product approach value added coal 75 million value added steel 75

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Jason Frankel Macroeconomics Homework 2 February 3, 2010 2. i. product approach value added- coal- 75 million value added- steel- 75 million (200-125 intermediate goods) GDP= 150 million ii. expenditure approach Consumption= 160 million (8 mil*20\$) Government=0 Investment=0 Exports=40 million Imports=(50 million) GDP=150 million iii. income approach Wage income (coal)- 50 million Wage income (steel)- 40 million After tax profit (coal)- 25 million After tax profit (steel)- 35 million GDP=150 million b- The current account deficit is \$10 million (exports-imports). c- in this situation, GNP=GDP because net factor payments is equal to zero. If it is owned by foreigners, then there is 25 million of profits abroad, making net factor payments are -25 mil, meaning GNP=125 million and GDP still equals 150 mil. 4. Year 1 Year 1 Year 2 Year 2 P1 Q1 P2 Q2 Computers 1,000 20 1,500 25 Bread 1 10,000 1.10 12,000 a- GDP year 1= 1000*20+10,000*1= \$ 30,000 GDP year 2= 1500*25+12,000*1.1= \$50,700 b- (year 1 base) Real GDP year 1= 30,000 Real GDP year 2= 1000*25+12000*1= 37,000 23.3% increase in real GDP. 1.2333

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(year 2 base) Real GDP year 1=1500*20+10000*1.10= \$41,000 Real GDP year 2= \$50,700 23.658% increase in real GDP 1.2366 Chain weighting= sqrt of 1.2366*1.233=
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## This note was uploaded on 02/08/2010 for the course ECON 232 taught by Professor Hyeokjeong during the Spring '09 term at Vanderbilt.

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Macroecon hw 2 - Jason Frankel Macroeconomics Homework 2 February 3 2010 2 i product approach value added coal 75 million value added steel 75

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