## Another first-year Macroeconomics question: see details ?

ReportTwo questions:

In the first, I know that the answer is (A) but I do not know how to calculate Government expenditures (G) with any equation besides GDP = C + I + G + Nx.

But in the question, the other variables are not given. Is there another way to calculate G?

In the second question, I need to calculate disposable personal income (DI). I have two equations for this, one being DI = C + PS where C is consumption and PS is personal savings, neither of which are found in the listed info. The other equation is more complicated requiring national income, which again, I do not see how to acquire with the given information.

1. Consider the following information about an economy (in billion dollars):

Private savings 50

Net domestic investment 30

Import 40

Export 30

Taxes 70

Government loan from the central bank 10

Retained profits 20

From the information above we can conclude that:

(A) Government expenditures are 80;

(B) Gross domestic investment is 50;

(C) Overall savings are 20;

(D) Net exports is 10;

(E) None of the above.

2. Consider the following data ($ billions)

Gross National Product 2616

Capital Consumption allowance 276

Indirect business taxes 208

Corporate profits 149

Social Insurance contributions 240

Net interest 230

Dividends 56

Government transfers to individuals 298

Personal interest income 329

Personal tax and non-tax payments 325

Disposable personal income equals:

(A) $1759 (B) $1871 (C) $2083 (D) $2147 (E) $2331

These are my last two problems in this section and I am LOST

## Answer

to the first one: the variables are given and with that, you can calculate G. The variables in the GDP equation do mean exactly what is given in the question: private savings = C, net domestic investment = I and the exports – imports = Nx (netto exports). I hope that helps a bit, my macroeconomics class was some time ago.

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