MACROECONOMICS

DR SURAYA ISMAIL
PROBLEM-BASED QUESTION1
MEASUREMENTS OF NATIONAL
INCOME

NAME OF GROUP MATRIC

NUMBER

SITI NUR LIYANA BINTI ISMAIL 073471

NUR SYAHIRAH ILYANA BINTI MOHAMAD IZWAN 073024

NUR SYAHIRAH SYAFIQAH BINTI ROZI 073622

ENGKU NUR ALYA BINTI ENGKU MOHAMAD NOR AZLAN 073702

NUR AFIQAH ADILA BINTI ADI 072944

QUESTION 1

You are given the following information about an economy. Answer the questions using
expenditure approach:

RM JUTA
Compensation of employees 8,500
Personal consumption expenditures 11,000
Proprietor’s income 4,800
Indirect taxes 50
Consumption of fixed capital 250
Gross private domestic investment 2500
Corporate profits 300
Government purchases of goods and services 3600
Imports 800
Subsidies 70
Receipts of factor income from the rest of the world 800
Net interest 400
Corporate income taxes 100
Exports 1000
Personal tax payments 130
Payments of factor income to the rest of the world 300
Transfer payments 80
Retained earnings 150
Social security taxes 50

a) Calculate the gross domestic product at market prices.

b) Calculate the net national product at market prices.

c) Determine the national income.

d) Calculate the personal income.

e) Calculate the disposable income.

f) How much the dividend?

QUESTION 1

RM JUTA
Personal consumption expenditures 11 000
Gross private domestic investment 2 500
Government purchases of goods and services 3 600
Exports 1 000
(-) Imports (800)
a) Gross domestic product at market prices 17 300
(-) Consumption of fixed capital (250)
Net domestic product at market price 17 050
Receipts of factor income from the rest of the world 800
(-) Payments of factor income to the rest of the world (300)
b) Net natonal product at market prices 17 550
(-) Indirect taxes (50)
Subsidies 70
c) National income 17 570
(-) Corporate income taxes (100)
(-) Social security taxes (50)
(-) Retained earnings (150)
Transfer payments 80
d) Personal income 17 350
(-) Personal tax payments (130)
e) Disposable income 17 220

RM JUTA
Corporate profits 300
(-) Corporate income taxes (100)
(-) Retained earnings (150)
f) Dividend 50
QUESTION 2

You are given a list of domestic output and national income data as below. Determine the
national income measures by the income method.

RM Billions
Personal consumption expenditures 245
Net foreign factor income 4
Transfer payments 12
Rents 14
Statistical discrepancy 8
Depreciation 27
Social security contributions 20
Interest 13
Proprietors’ income 33
Net exports 11
Dividends 16
Compensation of employees 223
Taxes on production and imports 18
Undistributed corporate profits 21
Personal taxes 26
Corporate income taxes 19
Corporate profits 56
Government purchases 72
Net private domestic investment 33
Personal saving 20

a) Determine GDP using an income approach.

b) Determine national income.

c) Find personal income.

d) Find disposable income

Question 2
a) Determine GDP using an income approach

RM billions
SUM OF:
COMPENSATION OF EMPLOYEES 223
RENTS 14
INTEREST 13
PROPRIETOR’S INCOME 33
CORPORATE PROFIT 56
TAXES ON PRODUCTION AND IMPORTS 18
NATIONAL INCOME 357
LESS: NET FOREIGN FACTOR INCOME 4
PLUS: DEPRECIATION 27
PLUS: STASTICAL DISCREPANCY 8

GROSS DOSMETIC PRODUCT(GDP) 388

 RM Billions
GROSS DOSMETIC PRODUCT 372
LESS: DEPRECIATION 27
NET DOSMETIC PRODUCT 345

NET DOSMETIC PRODUCT 345

LESS: STATISTICAL DISCREPANCY -8
PLUS: NET FOREIGN FACTOR INCOME 4
b) NATIONAL INCOME 357

NATIONAL INCOME 357

LESS: TAXES ON PRODUCTIONS AND IMPORTS 18
LESS: CORPORATE INCOME TAXES 19
LESS: SOCIAL SECURITY CONTIRIBUTIONS 20
LESS: UNDISTRIBUTED CORPORATE PROFIT 21
PLUS: TRANSFER PAYMENTS 12
c) PERSONAL INCOME 291

PERSONAL INCOME 291

LESS: PERSONAL TAXES 26
d) DISPOSABLE INCOME 265
QUESTION 3

The following table shows nominal GDP and an appropriate price index for a group of selected
years. Compute real GDP. Indicate in each calculation whether you are inflating or deflating the
nominal GDP data.

Nominal GDP, Price index Real GDP, Inflating/

Year
(RM Billions) (2015 = 100) (RM Billions) Deflating
1981 663.6 22.13
1991 1500.0 34.73
2001 3933.2 67.66
2011 7072.2 90.26
2021 11734.3 109.10
YEAR NOMINAL GDP PRICE INDEX REAL GDP INFLATING /
(RM BILLIONS) (2015=100) (RM BILLIONS) DEFLATING
=
Nominal GDP x 100
Real GDP

663.6 x 100
1981 663.6 22.13 22.13 Inflating
= 2998.64

1500.0 x 100
1991 1500.0 34.73 34.73 Inflating
= 4319.03

3933.2 x 100
2001 3933.2 67.66 67.66 Inflating
= 5813.18

7072.2 x 100
2011 7072.2 90.26 90.26 Inflating
= 7835.36

11734.3 x 100
2021 11734.3 109.10 109.10 Deflating
= 10755.55
QUESTION 4

The data shows the Malaysia’s economy. Calculate the GDP deflator for year 2019, 2020 and
2021? What conclusion can be made based on the value?

Year Nominal GDP Real GDP GDP Deflator

(billion) (billion)
2019 1512.7 1424.0 106.23

2020 1418.0 1345.1 105.42

2021 1545.4 1386.7 111.44

Conclusion, GDP deflator year 2020 decrease compare to year 2019 and increase in year 2021.

Nominal GDP
GDP deflator = X 100
Real GDP

Reference
Sarimah Aman Shah, Abd Rashid Mohd Ali, Norsela A.Manaf,(2018).National Income
Accounting. Principles Of Economics. Oxford Fajar Sdn. Bhd, Third Edition.