QUESTION 2 (20 marks) a) The following table shows an extract of national accounts from Sandyland for the year 2020. item 55 millions 1 Government bought supplies for all local 2 schools 2 Household purchases of food 10 3 Firms expanded their businesses by 6 buying equipment 4 Government paid salaries to all public 25 employees 5 Sandyland exported goodsfservices 30 6 Sandyland imported goodsiservices 14 T Households spent on local education 20 8 Increase in firms' inventories 18 9 Households bought second hand goods 12 Calculate the GDP of Sandyland using the expenditure method. [State the formula and show full workings]. Give your nal answer in a complete sentence, to one decimal place. (5 marks) Real GDP is often taken as an indicator of the economic wellbeing of citzens. What impact would each of the following have on real GDP? Would well-being of the citizens increase or decrease as a result? i) On average, people in a country decide to increase the number of hours they work by 5%. (2 marks) ii) Spending on national security increases in response to a terrorist attack. (2 marks) iii) The price level and nominal GDP increase by 10%. (2 marks) The Lim family consumes only apple juice, bananas and rice in a year. Prices in the base year are $4 per litre of apple juice, $3 per kg of bananas and $5 per kg of rice. In 2018 (base year), the Lim family spent $40 on apple juice, $45 on bananas and $25 on rice. In 2019, the price of apple juice was $3 per litre, the price of bananas was $4 per kg and the price of rice was $7 a kg. Calculate the Consumer Price Index (CPI) for the Lim family. [State the formula and show full workings]. State the final answer in a complete sentence, correct to one decimal place. (6 marks) Suppose you compare your income this year and last year and nd that your nominal income tell but your real income increased this year. How could that have happened? Explain clearly. {3 marks)