Answer:
GDP [Expenditure Approach] is $7,040, Depreciation is $920
Explanation:
The formula for calculating GDP [Expenditure Approach] is Consumption expenditure + Investment + Government expenditure + Exports − Imports
Mathematically,
Y = C + I + G + (X − M)
Where C = $7,000, I = $160, G = $180, (X-M) = -$300
Y = 7000 + 160 + 180 - 300 = $7,040
GDP [Expenditure Approach] is $7,040
Depreciation = GDP - NDP
NDP = wages + profits + interest + rent + net factor income of unincorporated businesses
Where wages = $5,900, profits + interest + rent = $220, net factor income from abroad = $0
NDP = 5900 + 220 + 0 = $6,120
Applying Depreciation = GDP - NDP, we have:
Depreciation = 7040 - 6120 = $920
N.B: The depreciation is a measure of the statistical discrepancy between the GDP and NDP
