Answer to Question #280385 in Microeconomics for Edet

Question

You are given the data below for 2008 for the imaginary country of Amagre, whose currency is the G.

• Consumption 350 billion G
• Transfer payments 100 billion G
• Investment 100 billion G
• Government purchases 200 billion G
• Exports 50 billion G
• Imports 150 billion G
• Bond purchases 200 billion G
• Earnings on foreign investments 75 billion G
• Foreign earnings on Amagre investment 25 billion G

1. Compute net foreign investment.
2. Compute net exports.
3. Compute GDP.
4. Compute GNP.

In addition to responding with a quantitative answer, briefly describe how you arrived at your answers.

Answer 1

1.Net investment is gross investment minus depreciation

In=Ig-A

In=100 billion G

2.Net exports is the difference between a country's exports and imports

Xn=Ex-Im=50-100=-150

3.Gross domestic product (GDP) is the sum of the values of all goods and services produced in the state.

$GDP = C + I + G + Xn=350+100+200-150=500$

4.

$GNP=GNP+\Delta=500+75+25-200=400$

where Δ = (primary income received by residents abroad) — (primary income received by non-residents in the economic territory of the country); that is, the balance of the exchange of primary income with the rest of the world.