MACROECONOMICS - PLEASE ANSWER PARTS e) , f) , g) and h) - THIS IS THE 4th time
ID: 1141748 • Letter: M
Question
MACROECONOMICS - PLEASE ANSWER PARTS e) , f) , g) and h) - THIS IS THE 4th time I am asking the same question from Chegg "experts"
PLEASE ONLY SOLVE FOR (using the table below):
e) WHAT IS THE GROSS MIXED INCOME?
f) What is NDP at basic prices?
g) What is National income?
h) What is Personal income?
The table below shows some of the national income accounts for the economy of Elmwood (all figures are in billions of dollars).
GIVEN INFORMATION: Using the information BELOW please answer the Questions above - parts e) , f) ,g) and h)
Personal income taxes
210
Indirect taxes (net of subsidies)
180
Corporate profit taxes
30
Exports
35
Government spending on goods and services
280
Disposable income
860
Personal savings
120
Imports
75
Compensation of employees
660
Investment (net)
85
Net foreign factor incomes
15
Gross operating surplus
120
Transfer payments
180
Depreciation
80
Taxes less subsidies on production
70
Other income not paid out
20
Other information I have calculated:
Consumption = 740 = 860-120
Net Exports = 35 – 75 = -40
Net Exports = -40
Gross Investment = 85 +80 = 165
Gross investment = 165
GDP at market prices = 740 +165 +280 +-40 = 1145
Personal income taxes
210
Indirect taxes (net of subsidies)
180
Corporate profit taxes
30
Exports
35
Government spending on goods and services
280
Disposable income
860
Personal savings
120
Imports
75
Compensation of employees
660
Investment (net)
85
Net foreign factor incomes
15
Gross operating surplus
120
Transfer payments
180
Depreciation
80
Taxes less subsidies on production
70
Other income not paid out
20
Explanation / Answer
e. When GDP is computed using income approach, the formula is:
GDP = Compensation to employees+ Gross operating surplus+ Gross mixed income + Taxes less subsidies
So, GDP=1145 as given
1145= 660+120+GMI+70
GMI= 1145-660-120-70= 295
f. NDP at basic price is equal to the NDP or the value of the goods and services the producer will receive less the taxed plus the subsidies.
NDP = GDP+NFFI = 1145+15= 1160; 1145 was given.
Now, NDP at basic prices= 1160-70= 1090
g. National Income= NNPfc= GDPmp+NNFI-Taxes plus subsidies= C+I+G+(X-M)+NNPFI-(T-S)= 740+165+280+(35-75)-70= 1075
h. Personal Income= Disposable income+ Personal taxes= 860+210= 1070
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