Last year for a nation to the south, net domestic product at factor cost equaled $3,300 billion.Indirect taxes minus subsidies equaled $200 billion, depreciation equaled $800 billion, the statistical discrepancy equaled zero, and net operating surplus equaled $150 billion.The country's GDP was
A) $2,300 billion.
B) $3,500 billion.
C) $4,300 billion.
D) $4,450 billion.
E) $4,150 billion.

Question

Quizplus · Accepted Answer

GDP = NDP + Depreciation
GDP = $3,300 billion + $800 billion = $4,100 billion
Gross National Product (GNP) = GDP + Net Income Flow from Abroad
As the question does not provide any information about the net income flow from abroad, we assume it to be zero.
Therefore, GNP = $4,100 billion
Since indirect taxes minus subsidies equal $200 billion and the statistical discrepancy equals zero,
Gross Domestic Income (GDI) = GNP - Indirect Taxes + Subsidies
GDI = $4,100 billion - $200 billion = $3,900 billion
Net Operating Surplus = Operating Surplus - Mixed Income
$150 billion = Operating Surplus - Mixed Income
Mixed Income = Operating Surplus - $150 billion
Since Operating Surplus equals Net Operating Surplus + mixed income,
Operating Surplus = $150 billion + Mixed Income
Hence,
GDI = Compensation of Employees + Operating Surplus
$3,900 billion = Compensation of Employees + $150 billion + Mixed Income
Compensation of Employees = $3,750 billion - Mixed Income
Now we add up all the components of GDP to get the final answer, which is:
GDP = Compensation of Employees + Operating Surplus + Depreciation + Indirect Taxes - Subsidies
GDP = ($3,750 billion - Mixed Income) + ($150 billion + Mixed Income) + $800 billion + $200 billion - $0
GDP =$4,300 billion.

Last Year for a Nation to the South, Net Domestic