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gross domestic product

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In a simple economy suppose that all income is either compensation of employees or profits. Suppose also that there are no indirect taxes. Calculate gross domestic product from the following set of numbers. Show that the expenditure approach and the income approach add up to the same figure.

Consumption $ 5,000
Ivestment 1,000
Depreciation 600
Profits 900
Exports 500
Compensation of employees 5,300
Government purchases 1,000
Saving 1,100
Imports 700

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As per the Expenditure Approach

Consumption $5,000
Investment 1,000
Less Depreciation -600
Net Investment 400
Government purchases 1,000
Exports ...

Solution Summary

The expert finds gross domestic product.