ECON 102 Lecture Notes - Lecture 4: Unearned Income, Net Income, Market Basket

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harlequinmink794

18 Nov 2020

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The sum of all the money spent in buying final goods and services. By households, businesses, government and buyers abroad. Includes all final purchases of machinery, equipment, tools by firms, all construction, changes in inventories and intellectual property products (r&d) Net investment = gross investment - depreciation. Net exports (xn) = exports (x) - imports (m) Gdp = c + ig + g + xn. The income derived or created from producing final goods and services. Payments to the suppliers of factors of production as wages, rent, interest and profit. This approach adds up expenditures that are allocated as income to those producing the output such as: Profits of corporations and government enterprises before taxes. Net income of farm and unincorporated businesses. All the income earned by canadian-supplied factors of production as wages, interest, rent, profit. The earned and unearned income available to resource suppliers and others before the payment of personal income taxes.

Related Questions

The largest component of GDP as measured by the expenditure approach is:

A) gross private domestic investment.

B) personal consumption expenditures.

C) government expenditure on goods and services.

D) net exports.

magentaraven621

1. Given the following data, answer questions. Compute GDP, NDP, NI, and DI if PI is $740

NOTE: Use both the expenditure and the income approaches for # 1.

Personal taxes……………30 Gross private domestic investment………….145

Depreciation……………..40 Corporate income taxes………………………65

Transfer payments…….....35 Undistributed income………………………...45

U.S. exports……………..12 Compensation for employees……………….540

Dividends………………..37 Indirect business taxes……………………...105

Corporate profits……….147 Personal consumption expenditure…………630

Rents…………………….10 Social security contributions……………….110

Interest.. ……………… 38 Federal government purchases……………..140

U. S. imports……………..7 State & local government purchases………..50

Proprietors’ income……..90

2. Given the following data, compute GDP, NDP, and NI

Personal consumption expenditure………………….219.1

Personal taxes………………………………………...40.5

U.S. exports of goods & services…………………….17.8

Transfer payment…………………………………….13.9

Net private domestic investment……………………..42.1

Depreciation………………………………………….11.8

Government purchases……………………………….59.4

Rents………………………………………………......5.0

U.S. imports of goods & services…………………....20.5

Interest...……………………………………………...12.6

Indirect business taxes………………………………..16.6

3. Given the following income data, answer questions #1 and #2 properly.

Year C Ig G Xn GDP

1 $ 3971.62 $800.20 $1235.38 $ --20.00 = $_________

2 $ 5407.02 ------------ 1580.51 --40.36 = 8318.48

3 $ 5584.65 1390.52 -------------- 89.33 = 8708.44

a. Fill- in all the missing blanks.

b. How big/small is the size of C, G, and Ig out of Year2 GDP?

raspberrylizard757

Question 1 Gross domestic product (GDP) measures the economy's production of

A) final goods and services.

B) intermediate goods.

C) consumer goods and services.

D) capital goods.

Question 2 Because GDP is measured in dollars per year, GDP is called a

A) stock.

B) flow.

C) cycle.

D) chain.

Question 3 Which of the following would not be included in the gross private domestic investment (I) category of GDP?

A) A retailer's additions to its inventories.

B) A bakery's purchase of a new oven.

C) A trader's purchase on NASDAQ stocks.

D) Newly built residential construction.

Question 4 Which of the following government payments would be included in the government consumption expenditures and gross investment (G) category of GDP?

A) A firefighter's monthly paycheck.

B) A retired grandmother's Social Security check.

C) A retired colonel's veteran's benefits.

D) A laid-off auto worker's unemployment conpensation check.

Question 5 The largest component in the income approach to measuring GDP is

A) compensation of employees.

B) rents.

C) profits.

D) net interest.

Question 6 Which approach to calculating GDP attempts to measure employee compensation, rents, profits, and net interest?

A) The circular-flow approach.

B) The product-market approach.

C) The income approach.

D) The expenditure approach.

Question 7 In recent years, people have benefited from greater amounts of leisure time. This trend

A) has caused GDP to rise.

B) has caused GDP to fall.

C) made GDP fluctuate randomly.

D) is not accounted for in the GDP statistic.

Question 8 National income (NI) is calculated by adjusting GDP for

A) depreciation of capital.

B) investment and net exports.

C) Social Security insurance contributions and transfer payments.

D) corporate and personal income taxes.

Question 9 If an economy's real GDP has increased, we can conclude that the economy

A) is inflationary.

B) has increased its production.

C) suffers from recession.

D) needs a tax cut.

Question 10 In the circular flow model, investment, government spending, and exports are classified as

A) injections.

B) leakages.

C) transfers.

D) consumption expenditures.

ECON 102 Lecture Notes - Lecture 4: Unearned Income, Net Income, Market Basket

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