3) Assume the following Government Purchases $200 Consumption Expenditures $500

Question

3) Assume the following Government Purchases $200 Consumption Expenditures $500 Gross Investment Exports Social Security Taxes$140 Depreciation Indirect Business Taxes $80 Imports Corporate Income Taxes $320 $400 $60 $520 $240 Personal Income Taxes $360 Corporate Retained Earnings $75 Net Foreign Factor Income $30 Government Transfer Payments $55 Net interest Payments to Households $90 a) Calculate GDP: b) Calculate NDP: c) Calculate National Income: d) Calculate Personal Income e) Calculate Disposable Income: f) Calculate Savings:

Explanation / Answer

Solution-

GDP

GDP = Consumption + Investments + Government purchases + Net Exports (Exports - Imports)

         = $500 + $320 + $200 + (400 - 520)

         = $500 + $320 + $200 + (-120)

         = $900

Hence, GDP is $900.

B. NDP

NDP = GDP - Depericiation-

        = $900 - $60

        = $840.

C. National Income

NI = NDP - Statistical Discrepency + Net foregn factor income

    = $840 - 0 + $30

    = $870.

D. Personal Income

PI = NI - Taxes on imports - Social security contributions - Corporate income taxes - Undistributed profits    + Transfer payments.

= $870 - $0 - $140 - $240 - $0 + $55

= $545.

Note : As per chegg policy we can solve only 4 sub questions, Thank You.

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