Q1Assume the following accounts and amounts were reported by a nation last year: Government purchases of goods and services were $6.9 billion; personal consumption expenditures were $40.6 billion; gross private domestic investment amounted to $20 billion; personal savings were estimated at $2 billion; imports of goods and services amounted to $7.9 billion; and the exports of goods and services were $4 billion.

(a)

Determine the nations gross domestic product.

Q2) Assume that the interest rate on a one-year Treasury bill is 4.0 percent and the rate on a two-year Treasury note is 8.7 percent.

(a) If the expected real rate of interest is 2.8 percent, determine the inflation premium on the Treasury bill.