1. Assume that the following data apply to Littleland for 2006. (All figures are in millions of dollars.)
(1) Net exports: -624
(2) Total business inventories at year end :763
(3) Personal consumption expenditure : 10200
(4) Depreciation : 1425
(5) Total government coonsumption and gross investment : 2100
(6) Gross residential investment: 356
(7) Reciepts of factor income from the rest of the woeld : 894
(8) Total imports : 2120
(9) State and local government expenditure and gross investment : 1300
(10) Factor payments to the rest of the world : 569
(11) Planned change in business inventories : 40
(12) Unplanned change in business inventories : 10
(13) Gross non-residential investment: 1854
Calculate each of the following (Explain your calculations).
a) Gross private domestic investment.
b) Gross domestic product.
c) Gross national income.
2. Suppose a firms extrapolate from recent growth in demand to future growth in demand. They invest when capital is insufficient to meet projected demand. If current capital exceeds what is required to meet expected demand, investment is cut to zero. How could an economy that worked like this generate investment-led business cycles.
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