Question

Graceland’s 2018 National Accounts
Interest and investment income	80
Dividends	90
Imports	640
Gross investment	340
Net investments from non-residents	160
Transfer payments	140
Government purchases	440
Personal taxes	320
Corporate income taxes	70
Indirect taxes less subsidies	100
Undistributed corporate profits	120
Net income of farm and unincorporated business	240
Wages, salaries, and supplementary labour income	1,000
Personal consumption expenditures	1,040
Capital consumption allowance	180
Exports	700
Profits of corporations and government enterprises before taxes	240

1. In 2018, Graceland’s net investment was

a) $120

b) $160

c) $180

d) $220

2. In 2018, Graceland’s Net Domestic Product (NDP) was

a) $1,650

b) $1,700

c) $1,850

d) $2,150

3. In 2018, Graceland’s personal income was

a) $1,550

b) $1,670

c) $1,870

d) $2,100

4. In 2018, Graceland’s personal disposable income was

a) $1,050

b) $1,150

c) $1,230

d) $1,400

5. In 2018, Graceland’s economy’s personal savings were

a) -$200

b) -$150

c) $150

d) $190

Answer 1

1. b) $160

Net investment = gross investment - depreciation or capital consumption allowance

= 340 - 180 = $160

2. b) $1700

Net domestic product = gross domestic product - depreciation

=

Personal consumption expenditures

+ Gross investment +  Government purchases + net exports - depreciation

= 1040 + 340 + 440 + (700-640) - 180

= $1700

3. a) $1550

personal income = Net domestic product - Indirect taxes less subsidies -  Undistributed corporate profits - Corporate income taxes + Transfer payments

= 1700 - 100 - 120 - 70 + 140 = $1550

4. c) $1230

Personal disposable income = Personal income - personal tax

= 1550 - 320 = $1230

5. d) $190

Personal saving = Personal disposable income - personal consumption expenditure

= 1230 - 1040 = $190