Question

Government Purchases 1500; Corporate Income Tax 400; Social Security Tax 1100; SalesTax, Excise Tax & Tariffs...

Government Purchases 1500; Corporate Income Tax 400; Social Security Tax 1100;

SalesTax, Excise Tax & Tariffs 400; Exports 800; Capital Consumption Allowance 250;

Investment Expenditure 2000; Imports 1000; Consumption Expenditure 3800; Retained

Earnings 100; Net Income Earned Abroad (-100); Transfer Payments 4500; Personal

Income Tax 3000

A) Calculate Gross Domestic Product

B) Calculate Net Domestic Product

C) Calculate National Income

D) Calculate Personal Income

E) CalculateDisposablePersonal Income

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Homework Answers

Answer #1

(a)

GDP = Consumption + Investment + Government purchases + Exports - Imports

= 3800 + 2000 + 1500 + 800 - 1000

= 7100

(b)

NDP = GDP - Capital Consumption Allowance

= 7100 - 250

= 6850

(c)

NI = NDP + Net income earned abroad

= 6850 - 100

= 6750

(d)

PI = NI + Transfer payments - Sales/Excise tax and tariff - Corporate income tax - Social security tax - Retained earnings

= 6750 + 4500 - 400 - 400 - 1100 - 100

= 9250

(e)

DI = PI - Personal income tax

= 9250 - 3000

= 6250

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