Question 4:
Suppose that the stock of capital employed in the domestic economy is
500 units and the stock of capital employed in the rest of the world
is 5000 units. Assume that domestic residents hold 100 units of capital
employed abroad and that foreigners own 50 units of capital employed in
the domestic economy. The output flow is everywhere equal to 15 percent
of the capital stock and the depreciation rate everywhere be 10 percent
per year. Calculate GDP and GNP and National Income for both the domestic
and the rest-of-world economies.
The correct answer.