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Chapter 4: Problem 142

Given below are the money NNP and Price Index \((1929\) base) for 1929 and \(1933:\) $$ \begin{array}{llc} & \begin{array}{l} \text { Money NNP } \\ \text { (billions of current dollars) } \end{array} & \begin{array}{c} \text { Price } \\ \text { Index } \end{array} \\ 1929 & \$ 96 & 100 \\ 1933 & \$ 48 & 75 \end{array} $$ a) What is the real NNP in 1933 using 1929 as a base? b) What is the real NNP in 1929 using 1933 as a base?

Short Answer

Expert verified
a) The real NNP in 1933 using 1929 as a base is \$64 billion. b) The real NNP in 1929 using 1933 as a base is \$72 billion.

Step by step solution

01

To find the real NNP in 1933 using 1929 as a base, we will use the formula mentioned above: \( Real \ NNP = \frac{Money \ NNP \times Base \ Year \ Price \ Index}{Other \ Year \ Price \ Index} \) Plugging in the values: \( Real \ NNP_{1933} = \frac{48 \times 100}{75} \) Calculating the value: \( Real \ NNP_{1933} = \$ 64 \ billion \) The real NNP in 1933 using 1929 as a base is $64 billion. #b) Real NNP in 1929 using 1933 as a base#

To find the real NNP in 1929 using 1933 as a base, we will again use the formula: \( Real \ NNP = \frac{Money \ NNP \times Base \ Year \ Price \ Index}{Other \ Year \ Price \ Index} \) This time, we have: \( Real \ NNP_{1929} = \frac{96 \times 75}{100} \) Calculating the value: \( Real \ NNP_{1929} = \$ 72 \ billion \) The real NNP in 1929 using 1933 as a base is $72 billion.

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Most popular questions from this chapter

Given the following figures: $$ \begin{array}{ll} \text { Total income } & \frac{\text { Year } 1}{\$ 400 \text { billion }} & \frac{\text { Year } 6}{\$ 550 \text { billion }} \\ \text { Price index } & 1.00 & 1.00 \end{array} $$ find the increase in real income from Year 1 to Year \(6 .\)

What are 'withdrawals' from, and 'injections' into the income -expenditure flow?

The following data provides a "real-world" illustration of adjusting GNP for changes in the price level (selected years, in billions of dollars). $$ \begin{array}{cccc} \text { Year } & \begin{array}{l} \text { Money, or } \\ \text { unadjusted GNP } \end{array} & \begin{array}{c} \text { Price level } \\ \text { index, percent } \end{array} & \begin{array}{c} \text { Adjusted } \\ \text { GNP } \end{array} \\ 1946 & \$ 209.6 & 44.06 & ? \\ 1951 & 330.2 & 57.27 & ? \\ 1958 & 448.9 & 66.06 & ? \\ 1964 & 635.7 & 72.71 & ? \\ 1968 & 868.5 & 82.57 & ? \\ 1972 & 1,171.5 & 100.00 & ? \\ 1974 & 1,406.9 & 116.20 & ? \\ 1975 & 1,498.9 & 126.37 & ? \end{array} $$ Determine the adjusted GNP for each year.

What is the purpose of the National Accounts?

Given the following national income accounting data, compute GNP, NNP and NI (all figures are in billions). \(\begin{array}{lc}\text { - Compensation of employees } & 195.6 \\ \text { - U.S. exports of goods and services } & 14.5 \\ \text { - Capital consumption allowance } & 12.3 \\ \text { - Government purchases of goods and services } & 60.6 \\ \text { - Indirect business taxes } & 13.1 \\ \text { - Net private domestic investment } & 63.4 \\ \text { - Transfer payments } & 14.2 \\\ \text { - U.S. imports of goods and services } & 17.8 \\ \text { - Personal taxes } & 43.0 \\ \text { - Personal consumption expenditures } & 230.9\end{array}\)
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