a. To calculate nominal GDP at market prices, we need to add up the total value of all final goods and services produced within the country in 2021. This can be done using the expenditure approach:
Nominal GDP = C + I + G + (X - M)
where C is household consumption, I is net investment, G is government spending on goods and services, X is income from exports, and M is income from imports.
Substituting the given values, we get:
Nominal GDP = 2100 + 350 + (1700 + 240 + 530) + (850 - 490) = $4,280 billion
Alternatively, we can use the income approach to calculate nominal GDP:
Nominal GDP = compensation of employees + rent + interest + profit + indirect taxes - subsidies
Substituting the given values, we get:
Nominal GDP = 1700 + 530 + 0 + 780 + 240 - 0 = $3,250 billion
b. To calculate GNP at market price, we need to add up the total income earned by all resident entities in the country, including income earned abroad and deducting income earned by foreign entities within the country. We can use the formula:
GNP at market price = GDP + net factor income from abroad
Substituting the given values, we get:
GNP at market price = $4,280 + 400 - 250 = $4,430 billion
To calculate GNP at factor cost, we need to deduct indirect taxes and add subsidies from GNP at market price. Since no subsidies are given, we only need to subtract indirect taxes:
GNP at factor cost = GNP at market price - indirect taxes = $4,430 - 240 = $4,190 billion
c. To calculate real GDP and real GNP, we need to adjust nominal GDP and GNP for changes in price levels between 2020 and 2021 using a price index. The real GDP and GNP formulas are:
Real GDP = Nominal GDP / Price index in 2021 x 100
Real GNP = Nominal GNP / Price index in 2021 x 100
Substituting the given values, we get:
Real GDP = $4,280 / 135 x 100 = $3,174.07 billion
Real GNP = $4,430 / 135 x 100 = $3,281.48 billion
The inflation rate in 2021 can be calculated as the percentage increase in the price index between 2020 and 2021:
Inflation rate = (Price index in 2021 - Price index in 2020) / Price index in 2020 x 100
Substituting the given values, we get:
Inflation rate = (135 - 120) / 120 x 100 = 12.5%
d. To calculate the economic growth rate in 2021, we can use the formula:
Economic growth rate = (Nominal GDP in 2021 - Nominal GDP in 2020) / Nominal GDP in 2020 x 100
Substituting the given values, we get:
Economic growth rate = ($4,280 - $3,500) / $3,500 x 100 = 22.29%