(a) Explain the difference between GDP, green GDP and GNI.
Green GDP – is GDP adjusted for the effects of production on the environment.
GNI – GDP plus incomes earned/received from abroad minus incomes paid/sent abroad.
Or
GNI is a measure of incomes received by the residents of a country independent of the geographic location of factors of production involved.
GDP – is a measure of the value of output produced within the boundaries of an economy independent of the nationality of the factors of production involved.
(a) Using the data in Table 1
(i) Calculate the GDP of Country X for 2012.
GDP = C + I + G + (X-m)
278.4b = 125.6 + 33.9 + 89.1 + (78.5 – 48.7)
(ii) Calculate the GNI of Country X for 2012.
GNI = GDP + (factor income abroad – factor income paid abroad)
GNI = GDP + (factor income abroad – factor income paid abroad)
$285.7b = 278.4 + (296.6 – 22.3)
(c) (i) Using the data in Table 2 calculate the level of real GDP for Country X for 2014 to 2016. Enter the results in table 2.
Real GDP = Nominal GDP/Deflator x 100
2014 Real GDP = 308.12/98.9 x 100 = 311.547 or 311.55
2015 Real GDP = 321.99/100 x 100 = 321.99 (the deflator is always 100 in the base year) Nominal = Real with (no inflation) there is no inflation in the base year.
2016 Real GDP = 332.65/102.2 x 100 = 325.489 or 325.49
Rate of Change Formula = (New – Old) / Old x 100
2015 Real Growth Rate is the change from 2014 to 2015
(321.99 – 311.55) / 311.55 x 100 = 3.35
2016 Real Growth Rate is the change from 2015 to 2016
(325.49 – 321.99) / 321.99 x 100 = 1.09
(ii) Outline the difference between nominal and real GDP.
Real GDP is nominal adjusted for inflation (changes in the average price level)
(d) Calculate the annual growth rate for Country X for 2015 & 2016. Enter in Table 2.
Rate of Change Formula = (New – Old) / Old x 100
2015 Real Growth Rate is the change from 2014 to 2015
(321.99 – 311.55) / 311.55 x 100 = 3.35
2016 Real Growth Rate is the change from 2015 to 2016
(325.49 – 321.99) / 321.99 x 100 = 1.09
(e) Using the data in Table 2 calculate the real GDP per capita for Country X for 2014 to 2016.
Real GDP (per capita) = RGDP/Population
2014 = 311,550,000,000/ 13,273,644 = 23,471
2015 = 321,990,000,000/ 13,340,012 = 24,137
2016 = 325,490,000,000/ 13,473,412 = 24,158
(f) Identify which of the 3 letters (a, b, c) on the following business cycle diagram best describes the position of Country X in 2016.
Country X in 2016 is at Point A
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