Question

Answer the following questions on the basis of the following hypothetical national income data. SHOW YOUR WORK.

   Interest paid by consumers------------------------------------- $ 15

   Government purchases of goods & services--------------- 400

   Social Security taxes---------------------------------------------- 135

   Personal taxes------------------------------------------------------ 320

   Corporate income taxes----------------------------------------- 20

   Indirect business taxes------------------------------------------- 50

   Transfer payments------------------------------------------------ 160

   U.S. exports--------------------------------------------------------- 35

   Gross private domestic investment--------------------------- 180

   Personal consumption expenditures-------------------------- 600

   U.S. imports-------------------------------------------------------- 45

   Undistributed corporate profits------------------------------- 15

   Depreciation-------------------------------------------------------- 60

   Gross Domestic Product is:

   Net Domestic Product is:

   National income is:

   Personal Income is:

   Disposable Income is:

   Saving is:

Answer 1

personal consmption expenditure = $600

+government goods and services $400

gross private domestic investment =$180

+net exports(exports -imports )=35-45=$-10

-indirect tax =($50)

gross domestic product GDP = $1120

net domestic product = GDP-depreciation=NDP = 1120 -60= $1060

national income = NNP at factor cost = NDP + nfia = $1060 (nfia equals zero )

Personal Income (PI) = NNP – Corporate Income Taxes + Undistributed Profits – Social Security + Transfer Payments

=1060+20+15+135+160 =$1390

Disposable Income (DI) = PI – Personal Income Taxes

=1390+ 320=$1710

Disposable income (DI) -Consumption (C) = Savings (S)

1710 - (government consumption + private consumption ) 1000 = $710