Question

One day, Barry the Barber, Inc., collects $500 for haircuts. Over this day, his equipment depreciates in value by $80. Of the remaining $420, Barry sends $50 to the government in sales taxes, takes home $250 in wages, and retains $120 in his business to add new equipment in the future. From the $250 that Barry takes home, he pays $90 in income taxes.Based on this information, complete the following table by computing Barry’s contribution to the measures of income listed.
Measure of Income Barry's contribution
Gross Domestic Product
Net National Product
National Income
Personal Income
Disposable Personal Income (Dollars)

Answer 1

Answer:

Gross Domestic Product

= $500

GDP is the final value of goods and services. The haircut is valued at $500 so is GDP.

Net National Product:

= GDP - Depreciation

= 500 - 80

= $420

National Income

= $420

This is the income that a resident of the country earns and $420 is what Barry earned in net income.

Personal Income

= National income - Retained earnings

= 420 - 120 - 50

= $250

Disposable Personal Income (Dollars)

= Personal income - income taxes

= 250 - 90

= $160