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examples of problems. Calculating G DP ( expenditure approach ). Use the table below to calculating GDP . GDP = C + G + I + ( E X - I M) In this case : C = $304. G  = $156.  I  = $124.  ( E X - I M)  = $18. Therefore: GDP = $304 + $156 + $124 + $18 GDP = $602.

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slide2

CalculatingGDP (expenditure approach)

Use the table below to calculating GDP.

GDP = C + G + I + (EX - IM)

In this case:

C = $304.G = $156. I = $124. (EX - IM) = $18.Therefore:

GDP = $304 + $156 + $124+ $18

GDP = $602

slide3

CalculatingGDP (income approach)

  • Compensations of employees + 
  • Rentalincome + Interest income + Profits +Indirect Business Taxes + Depreciation
  • W= $67R= $75. i= $150.PR= $200.IBT = $74
  • D = $36
  • Therefore:GDP = $67 + $75 + $150 + $200+$74 + $36
  • GDP = $602
slide4

Calculating GNP, NNP and National Income

GNP = GDP + NFIA

Net Factor Income from Abroad =

Receipts of factor income

from the rest of the World –

Payments of factor income

to the rest of the World

GNP = $ 602 + $12 = $ 614

NNP = GNP – Depreciation

NNP = $ 614 – $36 = $ 578

National Income = NNP - indirect taxes

NI = $ 578 - $74 = $504

slide6

Measuring Unemployment

The Bureau of Statistics conducts a monthly survey to estimate the unemploymentrate. Respondents’ answers are used to estimate the number of people who are employed,unemployed, and in the labor force.

a. Calculate the unemployment rate.

b. Calculate the unemployment rate taking into account discouraged workers.

a. Unemployment rate= 12,036/(99,093 + 12,036) = 10.83%

b. (12,036 + 1,849)/(99,093 + 12,036 + 1,849) = 12.29%

slide7

Measuring Unemployment

Use the information in the figure to calculatethe unemployment rate and

the labor force participation rate.

slide8

Measuring CPI, GDP and inflation rate

  • Use the following table to answer questions 1-3.
  • Suppose that in the small economy of X-land there were 4 goods
  • in the years 2006-2008. The details are contained in the following table:
  • Use the table to answer :

1. What’s the CPI for X-land in the year 2007?

2. What’s the GDP deflator for X-land for the year 2008?

  • 3. What’s the inflation rate in X-land for the year 2008 (using the CPI)?
slide9

1. What’s the CPI for X-land in the year 2007?

Consumer price index 2007=

(price of basket of goods and services in current year/price of basket of goods and services in base year)x100

= (1x2+3x2+3x3+2x2)/(1x1+3x2+3x3+2x1)x100=21/18x100=116,6

2. What’s the GDP deflator for X-land for the year 2008?

Nominal GDP= Q2008xPrice2008=70

Real GDP=Q2008xPrice2006= 5+12+21+7=45

GDP deflator=70/45x100= 155,5

3. What’s the inflation rate in X-land for the year 2008 (using the CPI)?

Inflation rate= (PI in year2 - CPI in year1)/ CPI in year1x100

CPI in 2008=

(price of basket of goods and services in 2008/price of basket of goods and services in the base year)x100

=(2+9+12+4)/(1+6+9+2)x100=27/18x100=150

CPI in 2007= 116,6

Inflation rate=(150-116,6)/116,6=28,6

slide10

Measuring Unemployment

Use the table to answer :

How many people were employed in X-land in 2012?

How many people were unemployed in X-land in 2012?

What was X-land’s labor-force participation rate in 2012?

What was X-land’s unemployment rate in 2012?

slide11

1. Refer to Table, How many people were employed in X-land in 2012?

  • People with jobs are employed.
  • 4000+1200+600=5.800
  • 2. Refer to Table 1. How many people were unemployed in X-land in 2012?
  • People who are looking for jobs, and available for work are unemployed.
  • 200+1000= 1200
  • 3. Refer to Table 1. What was X-land’s labor-force participation rate in 2012?
  • labor force participation rate = labor force/population
  • Labor force = employed+unemployed =5800+1200=7000
  • labor force participation rate = 7000/14000x100=50%
  • 4. Refer to Table 1.What was X-land’s unemployment rate in 2012?
  • unemployment rate = unemployed/(employed+unemployed)
  • unemployment rate =1200/7000x100=17,1%