CHAPTER 2

QUESTION 1
The following table shows the national income data for a country in 2017.

ITEMS RM (million)
Public investment 9900
Private investment 8600
communication 4040
Subsidy 1660
Ney export -1200
Depreciation 980
Factor income from abroad 3400
Factor income paid abroad 4000
Indirect tax 2500
Personal income tax 700
Consumers’ spending expenditures 6770
Change in stock 500
Government expenditure 10600
Social security contribution 1200
Corporate tax 3070
Tourism 5300
scholarship 1000

Calculate:

a) GDPmp
b) NDPfc
c) National income
d) Personal income
e) Disposable income
QUESTION 2
The following table shows the national income data for Inter Milan in 2017.

ITEMS RM (million)
Mining and quarrying 45200
Wages and salaries 24150
Agriculture 63850
Private investment 36522
Government services 28141
Export 35000
Electricity, gas, and water 12500
Construction 24500
Net property income abroad -750
Taxes from consumption 15200
Direct taxes 3520
Corporate taxes 48500
Transfer payment 450
Employee provident funds 6215
Subsidies 1500
Capital consumption allowances 5400
Social contribution 2355

Calculate:

a) GDPmp
b) GNPfc
c) National Income
d) Personal income
e) Disposable income

QUESTION 3
The table below contains a random selection of items from the national account of a country.

ITEMS RM (million)
Hotel and restaurant 12200
Communication 22000
Government expenditure 8500
Private expenditure 9500
Private investment 25500
Rent 40000
Import 12500
Mining and construction 7500
Public consumption 10500
Profit 46200
Export 22500
Capital consumption 2400
Tax on expenditure 15400
Net income receives from abroad 6900
Subsidies 8400
Transfer payments 1600
Business taxes 12600
Private income taxes 230
Employee provident funds 860
Social contribution 260
Calculate:

a) GDPmp
b) NDPmp
c) GNPfc
d) National income
e) Personal income
f) Disposable income

CHAPTER 3
QUESTION 4
Based on the question below, answer the following questions

Saving = - 340 + 0.2Yd

Investment = 400
Government expenditures = 520
Taxation = 160

All values in RM million

a) Calculate the value of autonomous consumption and marginal propensity to consume

b) Calculate the national income equilibrium for this economy
c) Calculate the average propensity to save and average propensity to consume at national
income is RM5000 million
d) is there any inflationary gap or deflationary gap if the full employment income is RM6,000
million? Sketch a diagram to show the situation.

QUESTION 5
Answer the following questions based on the information below. All the value are in RM million

Marginal propensity to save (MPS) = 0.2

Equilibrium income (Y) = 2,500
Full employment of income (Yf) = 3,000
Government expenditures = 250
Investment = 150
Tax = 10

a) find autonomous consumption and derive the consumption function

b) at the equilibrium level of income, how much is the level of savings?
c) What is the problem faced by this economy? Justify your answer.
d) Based on question (c) above, how the government can solve the problem by using
i. Government expenditure multiplier
ii. Tax multiplier
QUESTION 6

Based on the following information, answer the question below. (All figures are in RM million)

Consumption function C = 500 + 0.7Yd

Investment I = 200
Government expenditure G = 500
Tax T = 50

a) Derive saving function from consumption function

b) Calculate the national income equilibrium
c) Calculate the value of consumption at equilibrium
d) If full employment income is RM2,500 million, what is the problem facing by this country?
Show this situation in a well labeled diagram.
e) Find the new equilibrium income when investment increases by RM 200 million.