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National Income Accounting Problem

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National Income Accounting (example problem)

Selected national income accounting data in $ Billions:

Personal consumption $250
Unemployment benefits $20
Rental income $15
Dividend income $25
Interest income $10
Wages $220
Federal government purchases $150
Personal income taxes $35
State and local government purchases $25
Exports $45
Net domestic investment $75
Imports $50

Required:

A. Using the expenditure approach, compute GDP.

B. Compute personal income and disposable income.

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Solution Summary

The expert computes personal income and disposable income.

Solution Preview

Remember GDP = C + I + G + X
<br>C= Consumption
<br>I= Investments
<br>G= Government Expenditures
<br>X= Net Exports
<br>
<br>Note the following:
<br>
<br>Government Expenditures is equal to ...

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