Solution to Problem Set 11-12 (ECO100)

Solution to Problem Set 11-12 (ECO100) - f) Personal Income...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Prof. Gustavo Indart Department of Economics University of Toronto ECO 100Y INTRODUCTION TO ECONOMICS Solution to Problem Set 11-12 1. a) Net Domestic Income 195,000 + 35,000 + 20,000 + 30,000 = 280,000 b) Gross Domestic Product 280,000 + 42,000 + 38,000 = 360,000 c) Consumption 360,000 – 75,000 – 90,000 – 97,000 + 155,000 = 253,000 d) Personal Income 280,000 – 15,000 – 10,000 + 30,000 = 285,000 e) Savings 285,000 – 253,000 – 60,000 = -28,000 2. a) Gross Domestic Product as Aggregate Expenditure AE = 173,000 + 65,000 + 67,000 + 85,000 - 95,000 = 295,000 b) Net Domestic Income calculated from Aggregate Expenditure NDY = 295,000 – 35,000 – 25,000 = 235,000[= GDP – Ind Tx – Dep] c) Net Domestic Income calculated from factor cost NDY = 170,000 + 40,000 + 15,000 + 10,000 = 235,000 [W&S + inc Profit + uninc Net Income & Rent + Interest] d) Net Domestic Product 295,000 – 35,000 = 260,000 (or 235,000 + 25,000) [or consistent with a] e) Disposable 173,000 + 35,000 = 208,000
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: f) Personal Income 208,000 (or consistent with e) + 25,000 = 233,000 g) Gross National Product 295,000 (or consistent with a) – 8,000 = 287,000 3. The value of the services of productive factors (Net Domestic Income) gives a measured of GDP at factor cost, that is, GDP = NDI + Indirect Taxes + Depreciation. 4. CPI = Value of consumption basket in current prices / Value of consumption basket in base year prices, and the value of this consumption basket in Year 1 (base year) prices is 10 x $20 + 2 x $400 + 1 x $40 = $1,040. 2 a) The value of the consumption basket in Year 2 prices is 10 x $21 + 2 x $440 + 1 x $38 = $1,128, and thus the CPI in Year 2 is (1,128 / 1,040) x 100 = 108.5. The rate of inflation in Year 2 is therefore 8.5%. b) The value of the consumption basket in Year 3 prices is 10 x $22 + 2 x $450 + 1 x $40 = $1,160, and thus the CPI in Year 3 is (1,160 / 1,040) x 100 = 111.5. The rate of inflation in Year 3 is [(111.5 – 108.5) / 108.5] x 100 = 2.8%....
View Full Document

This note was uploaded on 01/16/2011 for the course ECO ECO100 taught by Professor Inheart during the Fall '09 term at University of Toronto.

Page1 / 2

Solution to Problem Set 11-12 (ECO100) - f) Personal Income...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online