Hello everyone. Hopefully I'm posting in the right section. I am currently studying for an ecomomics test I have and there is a question which I'm not sure if I'm doing correctly.

The Question:

Derive the increase in GDP and in Net Domestic Income if the following activities were to occur in Country A. This year Country A imported 100 additional computers at an import price of $3,000 each. Fifty of the computers were sold to consumers in Country A for $4,000 each [the mark-up was represented by sales commissions of $600, corporate profits before taxes of $300 and indirect taxes [sales taxes] of $100]. Country A exported 30 of these computers at an export price of $3,500 [the mark-up being divided between sales commissions of $400 and corporate profits of $100]. The final 20 computers were left in inventory at their import price. In addition, calculate the specific changes in each affected component in the final goods statement [only] for Country A for the year as a result of this set of economic transactions e.g., changes in consumption, exports etc.. Show all your work!

Answer:

First I figured that I need to use one of the 3 approaches to calculate the GDP. There's thesum of final goods and services approach (expenditure), thenfactor income approachand finally thevalue added approach. The only equation I'm sure off and the one I think fits in this situation is the expenditure approach which is:

GDP = Consumption + Investment + Government Purchases + (Exports-Imports).

These are the numbers I concluded:

C= $200,000since 50 computers were sold @ $4000/each

I=$60,000since 20 computers were left in storage valued at $3000/each

G=$5,000since $100 sales taxes from 50 computers sold

Net exports=-$195,000since imports were 100x3000=$300,000 while exports were 30x3500=$105,000 so 105,000-300,000=$-$195000

So plugging all this into the formula would be:

$200,000+$60,000+$5,000+(-$195,000)=$70,000Therefore I would conclude that the increase in GDP woulb be $70,000.

However I know that something is incorrect and I'm probably missing like 50% of the other questions. I don't understand how I'm suppose to use the profits and commisson they give me. How do I find the Net Domestic Income? How do I "calculate the specific changes in each affected component in the final goods statement"?

I don't think the question is that complicated its just that there are soo many numbers and questions going on that it confuses me. I hope someone can clarify any part of this problem or give me some tips to answer it more easily.

THANKS!