Answer to Question #47887 in Macroeconomics for dere

Question #47887
Given U.S incomes and Expenditures as follows wage-------- 100 Social security contributions---- 7 interest income ----- 5 personal taxes------- 20 consumption expenditure by households 60 Government purchases of goods and services 150 tranfer payments 50 coporate profit 100 invetment expenditure by business 100 corporate income tax 30 indirect business taxes 20 undistrubuted corporate profit 50 consumption of fixed capital(depreciation) 90 non income charges 40 rents 65 expenditure by foriegners 25 Net foreign factor income earned domestically 25 answer a) using expenditure approach, what is GDP? b)using income approach,what is GDP? c) what is Net domestic product? d) NI? e) PI? f) DI?
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Expert's answer
2014-10-17T15:04:01-0400
A) Expenditure approach:
GDP = Y = Consumption (C) + Investment (I) + Government purchases (G) + Export (Ex) - Import (Im) = 60 + 100 + 150 + 40 = 250
B) Income approach:
GDP = Labor Income (W) + Rental Income (R) + Interest Income (i) + Profits (PR) = 100 - 20 + 65 + 5 + 100 = 250
C) NDP = GDP - Capital Consumption (CC) = 250 - 90 = 160
D) NI = GDP + NFI = 250 + 25 = 275
E) Personal income (PI) = NI - corporate taxes - retained earnings - social security + transfer payments + net interest = 275 - 30 - 50 - 7 + 50 = 238
F) DI = PI - Personal taxes = 238 - 20 = 218

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