Chapter 1&2.docx

# Y c i g nx national income identity example company

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Y = C + I + G + NX National Income Identity Example Company produced 100 phones in 2018. Price is \$1000 per phone. Output approach: GDP = P X Q = 1000 x 100 = \$100,000 - Sold 30 phones to Canadian students - Sold 30 phones to Schulich - Sold 10 phones to Canadian government - Sold 10 phones to US government GDP = C + I + G + NX C = \$30,000 G = \$10,000 I = \$30,000 NX = \$10,000 Total = \$80,000 Real GDP o Computed using prices from a base year o If 2017 is the base year, RGDP 2017 = P2017 x Q2018 NGDP 2018 = P2017 x Q2018 o Suppose: NGDP 2018 = \$120B P2018 x Q2018 = 120 RGDP2018 = \$100B P2017 x Q2018 = 100 P2018/P2017 = 1.2 GDP Deflator o NGDP/RGDP x 100 Thesis:

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In the quest to expand profits, a large number of firms eventually seek access to international markets. This paper attempts to determine the factors that influence whether a firm will choose to invest in a foreign market. Once the determinants of foreign direct investment are better understood, firms will have a clearer understanding of the process.
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