Question

Based on the information below, calculate and show your work. Use figure 8-3 and table 8-2 as a reference for your calculations.

National Income=                                                                                       _________

GDP=                                                                                                              _________

NDP=                                                                                                              _________

Personal income=                                                                                       _________

Disposable income=                                                                                   _________

Statistical Data

Wages and salaries                                        5

Investments                                                     2

Imports                                                             1

Government spending                                  2.5

Rent                                                                   0.5

Social Security checks                                   0.5

Welfare checks                                               1.25

Consumption                                                   7.5

Depreciation                                                    2

Non-income expense (indirect business taxes      1

Social security taxes                                      0.50

Re-invested profits                                        0.25

Corporation taxes                                          0.50

Corporation profits                                        1

Unemployment checks                                 1

Dividends                                                          0.25

Personal income taxes                                 3

Exports                                                             0.50

Interest                                                             1

Proprietor’s income                                      1

Answer 1

GDP (Gross domestic product is the sum total of final values of all gods and services produced in a country in a year.

Formula to calculate GDP by expenditure method is : C+I+G+(X-M)

Where, C= Consumption expenditure, I= Investment expenditure, G= Govt. expenditure, (X= Export and M=Import)

Hence, in this case:

7.5+2+2.5+(0.5-1)

=11.5 units of currency

NDP = GDP-Depreciation

11.5-2=9.5 units of currency.

Personal income= Income through, rent, wages/salaries, interest, proprietor's income, dividend.

5+0.5+1+1+0.25= 7.75

Disposable income= Income- personal taxes and compulsory deductions.

7.75-3=4.75