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Answer to Question #50041 in Macroeconomics for abdulla sabit

Question #50041
The following information from the national income accounts for a hypothetical country:
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GDP - $6000
Gross investment 800
Net investment 200
Consumption 4000
Government purchase of goods and services 1100
Government budget surplus 30
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What is
1)NDP
2)Net Exports
3)Government taxes minus transfers
4)Disposable personal income
5)Personal saving
Expert's answer
National income can be calculated by adding up all public and private expenditures made on final goods and services during a year. It is obtained by:
- Personal consumption expenditure of goods and services.
- Gross domestic private investment.
- Government purchase of goods and services.
- Net Foreign investment.
So we can measure national income using the following equation:
GDP = C + I + G + NE
So, we can find Net Exports as
NE = GDP - C - I - G
NE = 6000 – 4000 – 800 – 1100 = 100
NDP can be calculated:
NDP = GDP- Depreciation
Depreciation = Gross investment - Net investment = 800-200 = 600 NDP = 6000-600 = 5400 The next step is to calculate the government taxes minus transfers Government budget surplus = Government taxes minus transfers - Government purchase of goods and services
30 = Government taxes minus transfers -1100 Government taxes minus transfers = 30+1100 = 1130 Disposable personal income can be calculated:
Disposable Personal Income = National Income + Government Transfers to Individuals − Personal Tax - Depreciation= National Income – (Personal Tax - Government Transfers to Individuals) - Depreciation = 6000 -1130 – 600 = 4270 The next step is to calculate Personal saving:
Personal saving = Disposable Personal Income – Consumption = 270

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