Econ 311 Quiz 1 solutions

Econ 311 Quiz 1 solutions - Intermediate Macroeconomics 311...

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Quiz 1, October 12, 2007; 9AM Note : This is a closed book assignment. You may use calculators. YOUR NAME: ________________________________ Directions : Answer each of the following questions. Show all your work. Partial credit will be given. Good Luck! QUESTION 1 Use the following data to answer the questions below (all figures are in billions of dollars). Item Amount Government Purchases of goods and services 500 Depreciation (consumption of fixed capital) 200 Imports 500 Consumption expenditures 1800 Net fixed Investment 300 Corporate Income Taxes 45 Indirect Business Taxes 55 Social Security Contributions 100 Undistributed Corporate Profits 120 Government Transfer and Interest Payments 450 Personal Interest Payments 80 Personal Taxes 350 Changes in inventories 25 Exports 350 Receipts of factor income from the rest of the world 200 Payments of factor income to the rest of the world 400 (a) What is gross domestic product (GDP)? (3 points) GDP = C + I + G + NX = 1800+(25+300+200)+500+(350-500)=2675 (b) What is domestic income? (3 points) DI = GDP – Depreciation – Indirect Business Taxes = 2675-200-55=2420 (c) What is personal income? (4 points)
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Econ 311 Quiz 1 solutions - Intermediate Macroeconomics 311...

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