Problem
The table below shows both incomes and expenditures.
1. If Gross Domestic Product is $3,400 Billion using the Income Method. Calculate the level of Investment. (Show your calculations).
|
Government expenditures on goods and service
|
$700 B
|
|
Wages, salaries, and supplementary labour income
|
$1,700 B
|
|
Depreciation
|
$450 B
|
|
Investment
|
?
|
|
Consumption expenditure
|
$1,950 B
|
|
Net exports (X-M)
|
$200 B
|
|
Indirect taxes less subsidies
|
$350 B
|
|
Profit
|
$500 B
|
|
Rent and Interest
|
$400 B
|
|
Statistical discrepancy
|
0
|
2. Explain how real GDP and nominal GDP differ. Why is it important to calculate real GDP?