8. Calculate gross domestic product (GDP), net domestic product (NDP), national

Question

8. Calculate gross domestic product (GDP), net domestic product (NDP), national income (NID, personal income (PI), and disposable income (DI) from the following data: Exports Imports Personal income taxes Consumption expenditure Corporate income taxes Retained earnings Private investment expenditure Government expenditures or purchases Indirect business taxes Depreciations Pay roll taxes Income made abroad by Americans Transfer payments Property taxes Sales taxes 795 $970 $650 $10,560 $850 $1,060 $3115 $4,500 $320 $800 $730 $380 $985 $360 $140

Explanation / Answer

Answer

Using expenditure method

GDPMP = Consumption Expenditure + Investment Expenditure + Government Expenditure + Net Exports

Hence,

GDPMP = 10560 + 3115 + 4500 + 795 - 970 = 18000

NDPMP = 18000 - 800 = 17200

National Income = GDPMP - Net Indirect Taxes - Depriciation + Income made abroad + Retained Earnings

= 18000 - 320 - 800 + 380 + 1060

= 18320

As there are no current transfers from abroad

Net National desposable Income = NNPFC +NIT

= 18320+ 320

= 18640

Personal Income = 18320 +985 - payroll tax - Income Tax

= 17725

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