Question

1. Calculate GDP, NDP, NI, PI, and DI from the following information. All numbers are in billions of dollars.

Wages $ 26,500
Consumption Expenditures $36,000
Government Expenditures $18,500
Imports $20,330
Exports $18,580
Property Taxes $16,000
Sales Taxes $9,715
Retained earnings $1,310
Personal Income Taxes $2,200
Private Domestic Investment Expenditures $15,650
Interest Income $1,940
Pay Roll taxes $1,300
Transfer Payments $880

Depreciation $1,300
Net Income Made Abroad by Americans $160
Indirect Business taxes $2,520
Corporate Income Taxes $320

Answer 1

Gross domestic product (GDP) = Consumption Expenditures + Private Domestic Investment Expenditures + Government Expenditures + Exports - Imports

GDP = C + I + G + X - M

GDP = $36,000 + $15,650 + $18,500 + $18,580 - $20,330

Gross domestic product (GDP) = $68,400

Net domestic product (NDP) = GDP – Depreciation

NDP = $68,400 - $1,300

Net domestic product (NDP) = $67,100

National income (NI) = NDP - Indirect Business taxes + Net Income Made Abroad by Americans

NI = $67,100 - $2,520 + $160

National income (NI) = $64,740

Personal income (PI) = NI - Retained earnings - Corporate Income Taxes – Depreciation + Transfer Payments

PI = $64,740 - $1,310 - $320 - $1,300 + $880

Personal income (PI) = $62,690

Disposable income (DI) = PI - Personal Income Taxes

DI = $62,690 - $2,200

Disposable income (DI) = $ 60,490