Question

Exhibit 5-11 GDP data (billions of dollars) Personal consumption expenditures $4,750 Exports 810 Government spending 1,400...

Exhibit 5-11 GDP data (billions of dollars)

Personal consumption expenditures

$4,750
Exports

810
Government spending

1,400
Social Security taxes

600
Depreciation

450
Indirect business taxes

550
Imports

850
Gross private domestic investment

900
Corporate income taxes

200
Personal taxes

800
Corporate profits

50
Transfer payments

700



In Exhibit 5-11, personal income (PI) is:

$9,210 billion.

$8,510 billion.

$6,560 billion.

$6,610 billion.

$10,910 billion.
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Answer #1

Correct option is $6,610 billion.

In Exhibit 5-11, personal income (PI) is: $6,610 billion.

Gross Domestic Product (GDP)=C+I+G+X-M

GDP=Personal Consumption Expenditures+Gross Private Domestic Investment+Government Spending+Exports-Imports

GDP=$4,750+$900+$1,400+$810-$850=$7,010

Net Domestic Product (NDP)=GDP-Depreciation

NDP=$7,010-$450=$6,560

National Income=$6,560

Personal Income=National Income+Transfer Payments-Social Security Taxes-Corporate Profits

Personal Income=$6,560+$700-$600-$50=$6,610 billion.

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