QUESTION ONE

Suppose you are given the following data on incomes and expenditures for the economy in
current prices for factors of production and outputs.

S/N Item Value (Billion TZS)

1 Consumption expenditures 2500
2 Employment compensation 2800
3 Government expenditure 800
4 Net indirect taxes 150
5 Exports 1200
6 Net corporate surplus and mixed income 850
7 Capital consumption allowance 200
8 Investment expenditure 600
9 Imports 1100

a) What is the value of nominal GDP measured by expenditures?

b) What is net domestic income?

c) What is the value of nominal GDP measured by the income approach?

QUESTION TWO

Suppose GDP is $2,000, consumption expenditure is $1,700, government expenditure is $50,

and net exports are $40.

a) What is business investment expenditure?

b) If exports are $350, what are imports?
c) In this example, net exports are positive. Could they be negative

QUESTION THREE

Consider the following information about a hypothetical economy

S/N Year Nominal GDP GDP deflator (2000= Population

(billions $) 100) (millions$)
1 2012 750 104.0 25.0
2 2013 825 112.0 30.0

a) Calculate the growth (percentage change) in nominal GDP from 2012 to 2013.
b) What was real GDP in 2012 and 2013? How much did real GDP grow?
c) If changes in the standard of living can be measured by changes in real per capita
GDP, did growth in nominal and real GDP raise the standard of living in this
economy from 2012 to 2013?
d) Explain the reasons for the change in standard of living that you have found.

QUESTION FOUR
If brewers buy barley and hops from agricultural producers, natural gas to fire their brew
kettles from gas companies and bottles from glass manufacturers as in the following table,
what is the value added of the brewing industry? If brewers also wholesale some of their
output to pubs, is that output counted in GDP? Explain your answer.

Costs (millions of current $) of:

Brewery retail sales Barley and hops Natural gas Bottles
1000 350 125 150

QUESTION FIVE

You are given the following information of a particular country in a certain year

GNP at market price is TZS 3960 Million

GDP at market price is TZS 4020 Million

NNP at market price is TZS 3766 Million

Find:

a) Net factor income from abroad and comment on it

b) Net domestic Product at market price

c) Depreciation value

QUESTION SIX

a) Which factors differentiate GDP from GNP of a country

b) What does the equality between injections and withdraw implies?

c) Given Marginal Propensity to Save is 0.5, find a multiplier