Personal consumption expenditures
$245
Net business transfer payments
9
Net factor income from the ROW
4
Transfer payments
12
Rents
14
Statistical discrepancy
8
Consumption of fixed capital (depreciation)
27
Social Security contributions
20
Net Interest
13
Proprietors’ income
33
Net exports
11
Dividends plus personal interest income
16
Compensation of employees
223
Indirect Taxes minus subsidies
18
Personal taxes
26
Corporate profits
56
Government purchases
72
Net private domestic investment
33
Surplus of government enterprises
-9
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; and second, by adding up the types of income and taxes that makeup NI.
c. Adjust NI (from part b ) as required to obtain PI.
d. Adjust PI (from part c ) as required to obtain PDI.
| Personal consumption expenditures | $245 |
| Net business transfer payments | 9 |
| Net factor income from the ROW | 4 |
| Transfer payments | 12 |
| Rents | 14 |
| Statistical discrepancy | 8 |
| Consumption of fixed capital (depreciation) | 27 |
| Social Security contributions | 20 |
| Net Interest | 13 |
| Proprietors’ income | 33 |
| Net exports | 11 |
| Dividends plus personal interest income | 16 |
| Compensation of employees | 223 |
| Indirect Taxes minus subsidies | 18 |
| Personal taxes | 26 |
| Corporate profits | 56 |
| Government purchases | 72 |
| Net private domestic investment | 33 |
| Surplus of government enterprises | -9 |
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; and second, by adding up the types of income and taxes that makeup NI.
c. Adjust NI (from part b ) as required to obtain PI.
d. Adjust PI (from part c ) as required to obtain PDI.
Related textbook solutions
Related questions
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5. The income approach The following table shows macroeconomic data for a hypothetical country. All figures are in billions of dollars.
National income can also be calculated based on disposable income. Use the following table to derive personal income and national income (in billions of dollars). Specify what needs to be added to disposable income to arrive at personal income, and explain how personal income should be adjusted to find national income.
National income is the total amount earned by the citizens of a country, while gross domestic product is the total value of goods and services produced within a country. To determine the gross domestic product, you have to make some adjustments to national income. Use the following table to derive gross domestic product and, as part of the process, net domestic product (NDP) (in billions of dollars). Again, specify what should be added to and subtracted from national income to arrive at the net domestic product, and what should be added to the net domestic product to arrive at the gross domestic product.
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