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    Disposable Personal Income

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    The following data describes an economy:

    Transfer Payments $72
    Interest paid by consumers 4
    Net exports 4
    Indirect Business taxes 47
    Net foreign Factor Income 2
    Net Nonbusiness Interest Income 10
    Contribution for Social Insurance 35
    Personal Taxes 91
    Corporate Retained Earnings 51
    Gross Private Investment 185
    Government Purchases 195
    Personal Consumption 500
    Depreciation 59

    On the basis of this data, calculate: GDP, GNP, NDP, NI, personal income, disposable personal income.

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    Solution Preview

    The formulas that we will need are:

    GDP = C + I + G + NX
    GNP = GDP + Net Foreign Factor Income
    NDP = GDP - Depreciation
    NI = GNP - Depreciation - Indirect Taxes
    Personal Income = NI - corporate taxes - retained earnings - ...

    Solution Summary

    Disposable Personal Income is achieved.