Question 2

Below is a list of domestic output and national income figures for a given year. All figures are in billions. The ensuing questions ask you to determine the major national income measures by both the expenditure and income methods. Answers derived by each approach should be the same.

a. Using the above data, determine GDP and NDP by the expenditure method.

b. Calculate National Income (NI) by the income method.

Personal consumption expenditures.............. Net foreign factor income earned Transfer payments........................... Rents Consumption of fixed capital (depreciation)....... Social security contributions Interest....... Proprietors' income Net exports.......................................... Dividends (part of corporate profits) Compensation of employees............. Indirect business taxes Undistributed corporate profits (part of profits).... Personal taxes Corporate income taxes (part of corporate profits).... Corporate profits Government purchases........ Net private domestic investment Personal saving.......

....$245 4 ....12 14 ....27 20 ....13 33 .....11 16 ....223 18 ....21 26 ....19 56 ......72 33 .......20