The following table shows macroeconomic data for a hypothetical country. All fig

Question

The following table shows macroeconomic data for a hypothetical country. All figures are in billions of dollars.

Billions of Dollars 120 35 60 Gross private domestic investment Depreciation Exports Imports Government spending Personal consumption expenditures Indirect business taxes (net of subsidies) Personal taxes Employee compensation Corporate profits and FICA contributions Rental income Net interest Proprietors' income Transfer payments and other income 130 325 20 90 380 80 25 35 65 Using the expenditure approach, GDP for this country was $ billion Complete the following table by calculating national income, personal income, and disposable personal income for this country. (Note: Be sure to enter your figures in billions of dollars.) Billions of Dollars National Income Personal Income Disposable Personal Income

Explanation / Answer

Y=GDP=C+I+G+NX

Billions of dollars

Personal consumption expenditure            325

Gross private domestic investment           120

Government spending 130

Net export 5

(Export –Import = 60-55)

Adding them we get 580

Using the expenditure approach, GDP for this country was $580 billion.

National income

                                                                                  Billions of dollars

Employee compensation 380

Proprietors’ income 5

Rental income 25

Corporate profit and FICA contribution 80

Net interest 35

Indirect business taxes 20

Total (equals National Income) 545

National Income $545 billion

Personal income = National income –Indirect business tax +Transfer payments and other income       

= 545-20+65

=$590billions

Disposable personal income =Personal income - Personal tax

=590-90

=$500 billions

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