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

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

Category	Value	Category	Value
Personal consumption expenditures	$245	Personal saving	20
Net foreign factor income	4	Dividends	16
Transfer payments	12	Compensation of employees	223
Rents	14	Taxes on production and imports	18
Consumption of fixed capital (depreciation)	27	Undistributed corporate profits	21
Statistical discrepancy	8	Personal taxes	26
Social Security contributions	20	Corporate income taxes	19
Interest	13	Corporate profits	56
Proprietors' income	33	Government purchases	72
Net exports	11	Net private domestic investment	33

a. Using the above data, determine GDP by both the expenditures and the income approaches. Then determine 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).

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Expert Solution

Rahul Sunny answered 9 months ago

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