Business, 11.02.2020 02:23, rachelkim999
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
Personal consumption expenditures $285
Net foreign factor income 4
Transfer payments 12
Rents 14
Statistical discrepancy 8
Consumption of fixed capital (depreciation) 27
Social Security contributions 20
Interest 13
Proprietors' income 43
Net exports 11
Dividends 16
Compensation of employees 263
Taxes on production and imports 18
Undistributed corporate profits 21
Personal taxes 26
Corporate income taxes 19
Corporate profits 56
Government purchases 82
Net private domestic investment 33
Personal saving 30
a. Using the above data, determine GDP by both the expenditures and the income approaches. Then determine NDP.
GDP using the expenditures approach = $ billion.
GDP using the income approach = $ billion.
NDP = $ billion.
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).
Method 1 = $ billion.
Method 2 = $ billion.
c. Adjust NI (from part b) as required to obtain PI.
PI = $ billion.
d. Adjust PI (from part c) as required to obtain DI.
DI = $ billion.
Answers: 1
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