BUSINESS ADMINISTRATION DEPARTMENT
HOA LAC
INDIVIDUAL ASSIGNMENT_TEST 02
Summer2023
SUBJECT: Macroeconomics (ECO121) - Essay
Duration: 180 minutes
STUDENT INFORMATION
Name: Bùi Thị Thu Hường Roll number: HS170958
Room No: Class: MKT1813
FOR TEACHER ONLY
MARK MARKED BY Signature of Proctor
(Name and Signature)
INSTRUCTION
Please read the instructions carefully before answering the questions. Do not start until you are
told to do so.
Students are NOT allowed to bring in any books, materials, and mobile phone, or transmit information
and exchange materials with any other during the examination period.
Question 1 (3 marks)
A country had the following data: income (Y) = $200,000, taxes (T) = $60,000, government purchases
(G) = $45,000, consumption (C) = $120,000, exports (EX) = $65,000 and imports (IM) = $70,000.
a. What was the country's private saving or businesses saving?
S= Y – C – T = $200,000 – $120,000 – $60,000= $20,000
b. What was the government saving (or government surplus)?
GS = T – G = $60,000 – $45,000 = $15,000
c. What was the national saving?
NS = S + GS = $20,000 + $15,000 = $35,000
d. Is the country lending or borrowing from the rest of the world and by how much?
EX < IM => the country is a net borrower from the rest of the world
Borrowing = IM – EX = $70,000 - $65,000 = $5,000
e. What was the country's investment?
I = NS + B = $35,000 + $5,000 = $40,000
f. How much investment is financed by national saving and how much investment is financed by
the lending or borrowing from the rest of the world?
- The investment financed by national saving is $35,000.
- The investment financed by borrowing is $5,000.
Question 2: (3 marks)
Consider the following data (in million dinars) for a country in 2023:
Personal consumption expenditure 1380
Compensation of employees (wages) 1400
Corporation Profits 300
Net interest 100
Government purchases of goods and services 590
GDP 2435
Gross private domestic investment 415
Net taxes 700
Rental income 150
Depreciation 90
Proprietor's income 220
GNP 2359
a. What was the country's net domestic product (NDP)
NDP = GDP – Depreciation = 2435 – 90 = 2345
b. What was the country's net export (NX)?
NX = GDP - (Personal consumption expenditure + Gross private domestic investment + Government
purchases of goods and services)
= 2435 - (1380 + 415 + 590) = 2435 - 2385 = 50 million dinars
c. The country is a: borrower or lender?
NFI = GNP – GDP = 2359 – 2435 = -76 million dinars
NFI is negative (-76 million dinars), the country is a borrower.
d. What was the country's net domestic income (NDI)?
NDI = Compensation of Employees + Corporation Profits + Net Interest + Rental Income + Proprietor's
Income = 1400 + 300 + 100 + 150 + 220 = 2170
e. How much were households and businesses saving
Household and Business Saving = NDI - Personal Consumption Expenditure = 2170 – 1380 = 790
f. How much were the national saving?
National Saving = Household and Business Saving + Net Taxes = 790 + 700 = 1490
g. What is the country's net factor income (NFI)?
NFI = GNP - GDP = 2359 - 2435 = -76 million dinars
h. What is the country's net indirect tax?
Net Indirect Tax = Net taxes - Net Factor Income (NFI) = 700 - (-76) = 776 million dinars
Question 3: (2 marks)
You are given the following information about an economy:
Gross private domestic investment 40
Government purchases of goods and services 30
Gross national product (GNP) 200
Current account balance -20
Taxes 60
Government transfer payments 25
Interest payment from the government (all to domestic households) 15
Factor income from the rest of the world 7
Factor payment to the rest of the world 9
Find the following, assuming that government investment is zero:
a. Consumption C = GNP - S – T
S = CA + NFP = -20 + ( Factor income from the rest of the world - Factor payment to the rest of the
world) = -20 + (-2) = -22
=> C= 200 - (-22) – 60 = 162
b. Net exports
NX = CA – FP = -20 -9 = -29
c. GDP
GDP = C + Gross private domestic investment + Government purchases of goods and services= 162 +
40 + 30 = 232
d. Net factor payments
NFP = Factor income from the rest of the world - Factor payment to the rest of the world = 7 – 9 = -2
e. Private saving
S = CA + NFP = -20 -2 = -22
g. Government saving
GS = T - Government transfer payments = 60 – 25 = 35
h. National saving
NS = S + GS = -22 + 35 = 13
Question 4 (2 marks) :
In the country of Kwaki, people produce canoes, fish for salmon, and grow corn. In one year they
produced 5000 canoes using labor and natural materials only, but sold only 4000, as the economy
entered a recession. The cost of producing each canoe was $1000, but the ones that sold were priced at
$1250. They fished $30 million worth of salmon. They used $3 million of the salmon as fertilizer for
corn. They grew and ate $55 million of corn.
What was Kwaki's GDP for the year?
The canoes in the inventory were valued : 1000$ x 1000 = 1$ milion
Total of sold 4000 canoes : 1250$ x 4000 = 5$ milion
Total of Salmon as fertilizer for corn : 30 mil $ - 3$ mil = 27 milion
Total of Salmon and Corn : 27$ mil + 55$ mil= 82$ milion
Total Kwaki’s GDP for the year : 82$ mil + 5$ mil + 1$ mil= 88$ milion
