Gce Model Questions Vol1 2018 Economics Question 7

Practice essay / theory question 7 from the 2018 Gce Model Questions Vol1 Economics examination. This question covers National Income .

Gce Model Questions Vol1 2018 Economics Essay / Theory
Topic: National Income
Question 7 GCE_MODEL_QUESTIONS_VOL1 • 2018 • ECONOMICS • essay

The table below shows selected macro‑economic data for Econland for the year 2022 (all figures in billions of naira).\n\n| Component | Value |\n|-------------------------------|-------|\n| Consumption (C) | 480 |\n| Investment (I) | 120 |\n| Government expenditure (G) | 200 |\n| Exports (X) | 150 |\n| Imports (M) | 130 |\n| Wages and salaries (W) | 300 |\n| Gross operating surplus (S) | 180 |\n| Indirect taxes less subsidies (T) | 70 |\n| Marginal propensity to consume (MPC) | 0.75 |\n\nUsing this information, answer the following questions.

Question Parts

( a )
Using the expenditure approach, calculate the Gross Domestic Product (GDP) for Econland in 2022. Show all steps.
( b )
Using the income approach, the following data are available: wages and salaries (W), gross operating surplus (S), and indirect taxes less subsidies (T). Mixed income (MIX) is not given directly but is known to equal 20 % of the sum of W and S.\n(i) Determine MIX.\n(ii) Calculate GDP by the income approach and comment on any difference with the result obtained in part (a).
( c )
The government is considering a policy to increase public investment by ₦15 billion, financed by borrowing. Discuss qualitatively how this policy is likely to affect (i) aggregate demand in the short run and (ii) the equilibrium level of national income in the medium term, assuming the marginal propensity to consume is 0.75.

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About This Question

This is Gce Model Questions Vol1 2018 Economics Question 7. It is one of the essay questions from the 2018 Gce Model Questions Vol1 Economics examination.

The question covers National Income .

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