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Macro Note

The document outlines the calculation of GDP for a sample German economy in 2025, involving Quiet Muffler GmbH, Ecological Engine GmbH, and Future Vehicles AG. It details the production costs, sales, and inventory of mufflers and engines, as well as the car manufacturing process and sales. Additionally, it discusses InVogue's contributions to GDP, GNP, GNDP, and NDP based on app sales and programmer wages.

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Tuan Le
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13 views2 pages

Macro Note

The document outlines the calculation of GDP for a sample German economy in 2025, involving Quiet Muffler GmbH, Ecological Engine GmbH, and Future Vehicles AG. It details the production costs, sales, and inventory of mufflers and engines, as well as the car manufacturing process and sales. Additionally, it discusses InVogue's contributions to GDP, GNP, GNDP, and NDP based on app sales and programmer wages.

Uploaded by

Tuan Le
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Calculating GDP for a Sample Economy

Quiet Muffler GmbH has a factory in Landshut valued at 2,000,000 Euro.


During the year 2025, Quiet Muffler builds ten mufflers. The market value
of each muffler is 800 Euro. Quiet Muffler’s costs for the production of each
muffler are:
Labor: 300 Euro
Interest on debt: 250 Euro
Imported components from Malaysia: 100 Euro
Taxes: 50 Euro

Ecological Engine GmbH, located in Ingolstadt, has a factory valued at


4,000,000 Euro. During 2025, Ecological Engine builds eleven engines,
each with a market value of 5,000 Euro. The costs to produce each engine
are:
Labor: 2,000 Euro
Imported components from Romania: 1,000 Euro
Taxes: 1,000 Euro

Ecological Engine sells ten of these engines, but at the end of the year
2025, it had not sold the eleventh engine, which was put into inventory.
Quiet Muffler sells all ten mufflers, and Ecological Engine sells all ten
engines to Future Vehicles AG, located in Stuttgart. Using Quiet Muffler’s
mufflers and Ecological Engine’s engines, Future Vehicles builds ten cars in
2025 at a cost of 15,000 Euro each:
Components: 5,800 Euro
Labor: 6,200 Euro
Taxes: 3,000 Euro per car

Future Vehicles sells seven of these cars to German households for 22,000
Euro each, while the remaining three cars are put into inventory.

How to calculate (under the product, income, and expenditure approaches)


the year 2025 GDP of this sample German economy consisting of Quiet
Muffler, Ecological Engine, and Future Vehicles?

Calculating a Firm’s Contributions to GDP, GNP, GNDP, and NDP


In the year 2025, Berlin-based InVogue develops a new app listing current sales
events in several
German cities; the app in the year 2025 is downloaded globally 500,000 times at a
purchase
price of 3 Euro. InVogue’s IT equipment at the beginning of the year 2025 is valued
at 120,000
Euro.

InVogue pays the following annual wages to its programmers: 550,000 Euro to
programmers
who are residents of Germany, and 150,000 Euro to programmers who are residents
of Poland.
The annual rate of depreciation on InVogue’s IT equipment is 25%.

The programmers who are residents of Germany in 2025 transfer 5,000 Euro of
their earnings
to an orphanage in Cambodia. The programmers who are residents of Poland in
2025 transfer
20,000 Euro of their earnings to relatives in Poland. The profits of InVogue are paid
as dividends
to its owners, who are residents of Qatar.

Calculate the year 2025 contributions of InVogue to the GDP, GNP, GNDP, and NDP
of the German economy.

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