Exam macroeconomics june 2010

1 Question 1 - In Ecoland, net factor income abroad is positive, indirect taxes are equal to 200, production subsidies are equal to 100, and capital depreciation is equal to 100. What can we say with with certainty ? :

	Net National Product at factor prices is larger than Net National Product at market prices.
	National Income is smaller than Net National Product at market prices.
	Domestic product is larger than National Product.
	We cannot say with certainty whether National Product at factor prices is smaller or larger than National Product at market prices.

2 Question 2 - Real GDP per capita is an imperfect measure of the standard of living because :

	it does not take into account the negative externalities that economic activity has on the environment.
	it does not take into account the size of the population that needs to share global production.
	it does not take into account the purchasing power lost due to a generalized price increase.
	it overestimates the importance of the informal economy.

3 Question 3 - Consider an economy in which there are three sectors and for which you only have the following information :

Sector	A	B	C
intermediates Purchases	0	15 from A	5 from A; 15 from B
Wages	5	10	10
Value of production	20	35	60

We can then state the following :

	GDP calculated as the sum of factor income is equal to 25.
	Value added of sector B is 10.
	GDP calculated as the sum of final output is equal to 80.
	The sum of value added is equal to 115.