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 $196.2 U.S. exports of goods and services 19.8 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 foreign income 2.2 Personal consumption expenditures 219.1 Statistical discrepancy 0.0 Instructions: Round your answers to one decimal place. a. GDP = $ billion b. NDP = $ billion c. National Income = $ billion

Answer 1

Answer:

(a) GDP = $333.9 billion

(b) NDP = $322.1 billion

(c) NI = $307.7 billion

Step-by-step explanation:

(a) Compute GDP

This can be computed using the following formula:

GDP = Gross Domestic Product = Personal consumption expenditure + net private domestic investment + government purchases + (US exports of goods - US Imports of goods) ......... (1)

Substituting the values into equation (1), we have:

GDP = $219.1 + $52.1 + $59.4 + ($19.8 - $16.5) = $333.9

Since all figures are in billions, we have:

GDP = $333.9 billion

(b) Compute NDP

This can be computed using the following formula:

NDP = Net domestic product = GDP - Consumption of fixed capital ................... (2)

Substituting the values into equation (2), we have:

NDP = $333.90 - $11.8 = $322.1

Since all figures are in billions, we have:

NDP = $322.1 billion

(c) Compute NI

This can be computed using the following formula:

NI = National Income = NDP - Taxes on production and imports  - Statistical discrepancy ........... (3)

Substituting the relevant values into equation (3), we have:

NI = $322.1 - $14.4 - $0.0 = $307.7

Since all figures are in billions, we have:

NI = $307.7 billion