# Calculate GNP, the current account surplus, and government savings for this economy.

Consider an economy which consists of three firms, A, B, and C, consumers, and a government. Firm A is a smart phone factory, while Firm B is a parts factory. Firm C is a smart phone retailer. In 2020, Firm B produces \$250,000 worth of parts, of which \$150,000 it sells to Firm A, and \$40,000 to Firm C. In addition Firm B sells \$30,000 worth of parts to the government, and \$30,000 worth of parts it exports. Firm B pays workers \$140,000. Firm A produces smart phones worth \$400,000, out of which \$250,000 it sells to the smart phone retailer (Firm C), \$80,000 it sells to the government, and \$70,000 worth of smart phones it stores as inventory to be sold the following year. The smart phone factory (Firm A) uses imported materials from China worth \$25,000. The smart phone factory pays workers \$100,000 and \$20,000 in taxes to the government. The smart phone retailer (Firm C) sells \$380,000 worth of smart phones: \$340,000 worth to domestic consumers, and \$40,000 to foreign consumers in the United States. The smart phone retailer pays taxes \$40,000 to the government and \$50,000 to the workers for marketing and sales. Consumers receive \$50,000 as dividends from abroad. The profits of firms A and C are distributed to domestic consumers. However, firm B is foreign owned.
(a)  (15 marks) Calculate GDP using, the product approach, the expenditure approach, the income approach. Show your work clearly (Note: you will not get marks for simply providing the final number).
(b)  (9 marks) Calculate GNP, the current account surplus, and government savings for this economy.

30% OFF
Turnitin Report
Formatting
Title Page
Citation
Place an Order