Variant 2.Theme: Gross Domestic Product and Product Accounts

Task 1: Use the following data to work Problems a) and b)

The national accounts of Parchment Paradise are kept on (you guessed it) parchment. A fire destroys the statistics office. The accounts are now incomplete but they contain the following data:

• GDP (expenditure approach): $2 730
• Compensation of employees: $390
• Indirect taxes less subsidies: $75
• Net interest: $510
• Gross Private Investment: $730
• Government expenditure: $310
• Rental income: $165
• Net exports: -$98
• Corporate profits: $620
• Proprietors' income: $225
• Net Investment: $245

a) CalculateNational Income and depreciation.

b) Calculate GDP (income approach) and the statistical discrepancy.

Task 2:In 2001 the Nominal GDP = $120 billion and Real GDP = $135 billion.Calculate the GDP deflator for this economy in 2001.

Task 3:We have the following data on nominal GDP and the real GDP for 2002 and 2003:

	2004	2005
Nominal GDP	$ 132billion	$ 137 billion
Real GDP (base year 1998)	$ 129 billion	$ 134 billion

Calculate the GDP deflator for 2004 and 2005 and also calculate the annual inflation rate in the GDP deflator.