Answer to Question #136251 in Macroeconomics for Daniel Mwaba

Question

a) Suppose an appliance store buys a refrigerator from the manufacturer on December 15, 2019 for K6,000, and that you then buy the refrigerator on January 15, 2020 for K7,500. What is the contribution to GDP in 2020. (2 Marks)
b) In 2007 nominal GDP was equal to K8.1109 billion; Consumption spending was K5.4937 billion; Gross investment spending was K1.256 billion; and Government purchases were K1.456 billion. What was the level of net exports? (2 Marks)
c) Is Mphamvu cement which is produced by Lafarge in Zambia included in the calculation of Zambia’s GDP?

Answer 1

A)

The contribution to GDP in 2020 is twofold as the final price of k7500and k6,000decrease in inventory. Since the decrease in inventory counts negatively, the net contribution to GDP in 2020 is k7500- k6000= k1,500. The k1,500 added to GDP in 2020 represents the value added  by the manufacturer , whose services included storing.

B)

GDP=C+I+G+Xn;

8.1109=5.4937+1.256+1.456+Xn;

8.1109=8.2057+Xn;

Xn=8.2057-8.1109;

0.0948.

C)

Yes