Answer to Question #24172 in Macroeconomics for Andy

Question

How do you calculate GDP, GNP, NNP, national income, personal income, and personal disposable income?

Answer 1

1. The basic formula for calculating the GDP is: Y = C + I + E + G, where Y= GDP; C = Consumer Spending; I = Investment made by industry; E = Excess of
Exports over Imports; G = Government Spending.

2. The formula for GNP is: Consumption + Government Expenditures +Investments + Exports + Foreign Production by U.S. Companies – Domestic
Production by Foreign Companies = Gross National Product

3. NNP = Gross National Product - Depreciation or NNP = Market Value of Finished Goods + Market Value of Finished Services - Depreciation

4. National Income (NI) = NNP – In Direct Taxes + Subsidies

5. Personal Income (PI) = NI - Corporate Taxes - Retained Earnings - Social Security + Transfer Payments + Net Interest
6. Disposable Personal Income (DPI) = PI –Personal Taxes