Below is a list of domestic output and national income figures for a given year.

Question

Below is a list of domestic output and national income figures for a given year. All figures are in billions. The questions that follow ask you to determine the major national income measures by both the expenditure and income methods. The results you obtain with the different methods should be the same.

a. Using the above data, determine GDP by both the expenditure and the income approaches and then determine NDP.

Instructions: Enter only whole numbers for your answers.

GDP, the expenditure approach: $ billion

GDP, the income approach: $ billion

NDP: $ billion

b. Now determine NI: first, by making the required additions and subtractions from GDP (Method 1), and second, by adding up the types of income and taxes that make up NI (Method 2).

Instructions: Enter only whole numbers for your answers.

Method 1: $ billion

Method 2: $ billion

c. Adjust National Income (from part b) as required to obtain PI.

Instructions: Enter only whole numbers for your answers.

Personal Income = $ billion

d. Adjust PI (from part c) as required to obtain DI.

Instructions: Enter a whole number for your answer.

Disposable Income = $ billion

Category Value Personal consumption expenditures $295 Net foreign factor income 4 Transfer payments 12 Rents 14 Statistical discrepancy 8 Consumption of fixed capital (depreciation) 27 Social security contributions 20 Interest 13 Proprietors' income 43 Net exports 11 Dividends 16 Compensation of employees 273 Taxes on production and imports 18 Undistributed corporate profits 21 Personal taxes 26 Corporate income taxes 19 Corporate profits 56 Government purchases 82 Net private domestic investment 33 Personal saving 30

Explanation / Answer

GDP = Compensation of employees + Rent + Interest + Proprietor%u2019s Income + Corporate Profits + Indirect business taxes + Depreciation + Net foreign factor income
= $223 + $14 + $13 + $33 + $56 + $18+ $27 +4= $388

======================================================================================================================================================

NDP = GDP %u2013 Depreciation
= $388 - $27
$361

======================================================================================================================================================

b.NI = Wages + rents + Interests + Corporate profits + Propritor income
= $223 + $14 + $13 + $56 + $ 33
= $339

======================================================================================================================================================
c. PI = NI %u2013 Social Security contributions %u2013 Corporate income taxes %u2013 Undistributed corporate profit + Transfer payments
=$339 - $20 - $ 19 - $21 +$12
= $291
======================================================================================================================================================

d. DI = PI %u2013 Personal Tax
= $291 + $26
= $265

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.