To the right is a list of domestic output and national income figures for a cert

Question

To the right is a list of domestic output and national income figures for a certain year. All figures are in billions. The questions that follow ask you to determine the major national income measures by both the expenditures and the income approaches. The results you obtain with the different methods should be the same. LO2 a. Using the above data, determine GDP by both the expenditures and the income approaches. Then determine NDP. b. Now determine NI in two ways: first, by making the required additions or subtractions from NDP; and second, by adding up the types of income and taxes that make up NI. c. Adjust NI (from part b) as required to obtain PI. d. Adjust PI (from part c) as required to obtain DI. (McConnell 503-504)

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Compensation of employees $194.2
U.S exports of goods ad services 17.8
Consumption of fixed capital 11.8
Government purchases 59.4
Taxes on production and imports 14.4
Net private domestic investment 52.1
Transfer payments 13.9
U.S imports of goods and services 16.5
Personal taxes 40.5
Net foregin factor income 2.2
Personal consumption expeditures 219.1
Statistical discrepancy 0

Explanation / Answer

A)

GDP = C + I + G + (Ex - Im)

where “C” equals spending by consumers,
“I” equals investment by businesses,
“G” equals government spending and
“(Ex - Im)” equals net exports, that is, the value of exports minus imports. Net exports may be negative.

therefor

GDP = $388

and NDP =$362

B) NI = $399

C)PI = $291

D) DI = $265

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