Problem A Use the national income data in the table below to compute the followi
ID: 1194723 • Letter: P
Question
Problem A
Use the national income data in the table below to compute the following:
GDP.
NDP.
NI.
Problem B
Compare a $40,000 income in 1980 to 2010 and analyze the following questions:
What are the differences in the available products?
What are the differences in the quality of products?
If you made $40,000 in 1980 and in 2010, what would your income status or wealth be in each time period?
In which period would you choose to live, and why?
National Income Data National Income Accounting Data Amount (billions) Compensation of employees $288.2 US exports of goods and services 63.4 Consumption of fixed capital 23.6 Government purchases 188.8 Taxes on production and imports 28.8 Net private domestic investment 104.2 Transfer payments 27.8 US imports of goods and services 33.0 Personal taxes 81 Net foreign factor income 4.4 Personal consumption expenditures 438.2 Statistical discrepancy 0Explanation / Answer
PROBLEM - A
(a)
GDP ($ billion) = Personal consumption expenditure + Net private domestic investment + Government purchases + Exports of goods & services - Imports of goods & services
= 438.2 + 104.2 + 188.8 + 63.4 - 33
= 761.6
(b)
NDP ($ billion) = GDP - Depreciation (Consumption of fixed capital)
= 761.6 - 23.6
= 738
(c)
NI ($ billion) = NDP + Net foreign factor income
= 738 + 4.4
= 742.2
PROBLEM - B
To analyze difference in availability & quality of products, the quantity details of consumption baskets in each period are required, which is not provided.
Since price level has increased between 1980 and 2010, purchasing power of dollar has decreased, so real earnings are much lower in 2010. So income or wealth status will be relatively lower in 2010.
In strict economic sense I would choose to live in 1980 since value of dollar was much higher that time.
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