In: Economics
Personal consumption expenditures $295
Net exports 11
Net foreign factor income 4
Dividends 16
Transfer payments 12
Compensation of employees 273
Rents 14
Taxes on production and imports 18
Statistical discrepancy 8
Undistributed corporate profits 21
Consumption of fixed capital (depreciation) 27
Personal taxes 26
Social Security contributions 20
Corporate income taxes 19
Interest 13
Corporate profits 56
Proprietors' income 43
Government purchases 82
Personal saving 30
Net private domestic investment 33
A. Using the above data, determine the GDP by both the expenditures and the income approaches. Then determind NDP.
B. Now determine NI in two ways: first, by making the required additions or subtractions from NDP (method 1); and second, by adding up the types of income and taxes that make up NI (method 2)
C. Adjust NI (from part B) as required to obtain PI.
D. Adjust PI (from part C) as required to obtain DI.
A | |||||||
Expenditure approach: | Income approach | ||||||
GDP=WAGE+RENT+INTEREST+OWNERS' INCOME+CORPORATE PROFIT+ ADJUSTMENTS | |||||||
Personal consumption expenditures | $295 | WAGE: | Compensation of employees | 273 | |||
Net private domestic investment | 33 | RENT: | Rents | 14 | |||
Consumption of fixed capital (depreciation) | 27 | INTEREST: | Interest | 13 | |||
Gross private domestic investment | 60 | OWNER'S INCOME | Proprietors' income | 43 | |||
Government purchases | 82 | CORPORATE PROFIT | Corporate profits | 56 | |||
Net export | 11 | ADJUSTMENTS: | Indirect business taxes | 18 | |||
Consumption of fixed capital (depreciation) | 27 | ||||||
GDP=C+I+G+NX | Net foreign factor income earned | 4 | |||||
Gross domestic product | $448 | Gross domestic product | 448 | ||||
NDP= GDP - Depreciation | |||||||
$448 -27 | |||||||
421 | |||||||
B | NI=NDP-Net foreign income earned in U.S.- Indirect tax | ||||||
$421 - 4 - 18 | |||||||
399 | |||||||
both method will have same national income | |||||||
Personal income: | |||||||
C | PI= NI - S.S. - Corporate income taxes - Undistributed corporate profit + Transfer payment | ||||||
399-20-19-21+12 | |||||||
351 | |||||||
D | Disposable Income | ||||||
DI= PI - Personal tax |
|||||||
351 - 26 | |||||||
325 |