With aid of diagram describe how each of the following will affect the demand for personal computers: (a) a rise in incomes (assuming computers are a normal good); (b) a lower expected price for computers; (c) cheaper software; (d) computers become simpler to operate. {10 Marks} Question Two The following questions relate to the information in the table below. Billions of dollars Consumption $1,349.5 Investment 805.3 Government purchases 626.9 Net exports (189.1) Capital consumption allowance 203.6 Indirect business taxes 213.3 Statistical discrepancy 54.4 Social Security insurance taxes 206.5 Transfer payments 355.3 Undistributed profits 432.0 Corporate profits taxes 77.7 Personal taxes 340.0 Dividends 564.0 Compensation of employees 1300.0 Income earned from the rest of the world 60.0 Income earned by the rest of the world 106.0 Proprietors' income 430.0 Rental income 245.0 Net interest 74.0

a. Calculate Gross Domestic Product at market price and at factor cost {5 marks} b. Net National Income in the economy at market price and at factor cost {5 marks} c. National Income {5 marks} d. Personal Income {5 marks} e. Explain the difference between Real and Nominal GDP. {5 marks}

Question Three

i. Draw the circular flow diagram {12 marks}