Question

Using the following national income accounting data, compute (a) GDP, (b) NDP, and (c) NI. All figures are in billions. Category Value Compensation of employees U.S. exports of goods and services Consumption of fixed capital Government purchases Taxes on production and imports Net private domestic investment Transfer payments U.S. imports of goods and services Personal taxes Net foreign income Personal consumption expenditures Statistical discrepancy $195.2 18.8 11.8 59.4 14.4 52.1 13.9 16.5 40.5 2.2 219.1 0.0 Instructions: Round your answers to one decimal place. a. GDP $b. NDP - $ c. National Income $ billion billion billion

Answer 1

Explanation:

GDP: Gross Domestic Product shall be the financial value for all finished products and services manufactured within a certain time frame in a country.

NDP: National Product symbolises GDP at the cost of factor except for depreciation of capital.

National Income (NI): Net Factor Cost Product = NNP Market price less Indirect taxes and about subsidies.

Analysis GDP, NDP, and NI

Given values in $ billion we first find the GDP

GDP = NDP + Capital Depreciation

GDP = Consumption + Investment + Government Expenditure +Exports - Imports.

Consumption = 219.1, Government Expenditure = 59.4, Exports =17.8, Imports = 16.5

Investment = Net Investment + Capital Depreciation

                   = 52.1+11.8

                   = $ 63.9

GDP = 219.1+63.9+59.4+17.8-16.5

         =$ 343.7

NDP = GDP â Capital Depreciation

        = 343.7-11.8

        = $ 331.9

Finally National Income (NI)

NI = NDP minus (Net foreign factor income earned in U.S. 2.2 and Indirect business taxes =14.4)

     = 331.9 â (2.2+14.4)

     = $315.3 this is the National Income In $ billion