CALCULATING NATIONAL INCOME AND GDP

1. Calculate nominal GDP, given the following information from the national accounts of Flatland for
the year 2019 (all figures are in billion FTL the national currency),

Consumer Spending 125

Government spending 46
Investment spending 35
Exports of goods and services 12
Imports of goods and services 17
2. Now suppose that profits of foreign multinational corporations in Flatland and incomes of foreign
workers in Flatland that were sent home 2019 were FTL 3.7 billion. The profits of Flatland’s
multinational corporations abroad and income of Flatland workers abroad that were sent back to
Flatland were FTL 4.5 billion. What was Flatland’s GNI in 2019?
3. You read in one source of information that real GDP in a hypothetical country in 2001 was $243
billion; in another source of information you read that real GDP in 2002 was $277 billion. State what
information you need to be sure that the two figures can be compare with each other
4. You are given the information in the table of a country Lakeland.

Year 2015 2016 2017 2018 2019

Nominal GDP 19.9 20.7 21.9 22.6 22.3
(Billion LKL)
Price Deflator (GDP 98.5 100.0 102.3 107.6 103.7
deflator)
Population (million) 1.20 1.21 1.22 1.23 1.27

a. Identify the base year.

b. Calculate the real GDP for each of the five years in the table.
c. State which year real GDP is the same as nominal GDP. Explain why.
d. In 2017-18, nominal GDP increased but real GDP fell (check if this is what your calculations show).
Explain how this could have happened.
e. In 2018-19, nominal GDP increased but real GDP fell (check if this is what your calculations show).
Explain how this could have happened.
f. Calculate the real GDP per capita for each of the years.
g. In 2018-19, real GDP increased but real GDP per capital fell (check that this is what your calculations
show). Explain how this could have happened.