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Recompute the entries in a table similar to Table 2-2 treating rms (the corporate sector) and entrepreneurial businesses (the noncorporate sector) as distinct entities (they
Recompute the entries in a table similar to Table 2-2 treating rms (the corporate sector) and entrepreneurial businesses (the noncorporate sector) as distinct entities (they must have their own balance sheets); for convenience Table 2-2 is reproduced here. How do the National Accounts change? Assume that the rents, investment, and sales for the corporate sector are 80 percent of the total for each category (leaving 20 percent for the noncorporate sector), while entrepreneurial returns come entirely from the noncorporate sector.
Initial Balance Sheets Households Assets Liabilities Deposits 5,700,000 Net Worth 5,700,000 Banks Assets Liabilities Capital 5,700,000 Deposits 5,700,000 Firms Assets Liabilities 0 0 National Balance Sheet Assets Liabilities Capital 5,700,000 Net Worth 5,700,000 Receipts Wages (4) Entrepreneurial Returns (5) Interest Payments (6) Total Receipts Households Expenditures 1,530,000 Consumption (1) 1,600,000 200,000 570,000 Deposits (7) 700,000 2,300,000 Total Payments 2,300,000 Households Assets Liabilities Initial Deposits 5,700,000 Initial Net Worth 5,700,000 New Deposits (7) 700,000 Net Saving 700,000 Total Assets 6,400,000 Total Net Worth 6,400,000 National Accounts Banks Assets Liabilities Receipts Expenditures Rents (3) 570,000 Interest Payments (6') 570,000 Initial Capital 5,700,000 Initial Net Worth 5,700,000 Net Investment 700,000 Net Saving 700,000 Total Assets 6,400,000 Total Net Worth 6,400,000 New Deposits (7') 700,000 Purchases of Capital Goods 700,000 Total Receipts 1,270,000 Total Payments 1,270,000 Assets Initial Capital Purchase of New Capital (2) Banks Liabilities 5,700,000 Initial Deposits 5,700,000 700,000 New Deposits (7) 700,000 6,400,000 Total Net Worth 6,400,000 Total Assets Firms Receipts Expenditures Sales of Consumer Goods (1) 1,600,000 570,000 1,530,000 Rental Payments (3') Wage Payments (4) Returns to Entrepreneurs (5') Total Payments Sales of Capital Goods (2) 700,000 200,000 Total Receipts 2,300,000 2,300,000 Initial Balance Sheets Households Assets Liabilities Deposits 5,700,000 Net Worth 5,700,000 Banks Assets Liabilities Capital 5,700,000 Deposits 5,700,000 Firms Assets Liabilities 0 0 National Balance Sheet Assets Liabilities Capital 5,700,000 Net Worth 5,700,000 Receipts Wages (4) Entrepreneurial Returns (5) Interest Payments (6) Total Receipts Households Expenditures 1,530,000 Consumption (1) 1,600,000 200,000 570,000 Deposits (7) 700,000 2,300,000 Total Payments 2,300,000 Households Assets Liabilities Initial Deposits 5,700,000 Initial Net Worth 5,700,000 New Deposits (7) 700,000 Net Saving 700,000 Total Assets 6,400,000 Total Net Worth 6,400,000 National Accounts Banks Assets Liabilities Receipts Expenditures Rents (3) 570,000 Interest Payments (6') 570,000 Initial Capital 5,700,000 Initial Net Worth 5,700,000 Net Investment 700,000 Net Saving 700,000 Total Assets 6,400,000 Total Net Worth 6,400,000 New Deposits (7') 700,000 Purchases of Capital Goods 700,000 Total Receipts 1,270,000 Total Payments 1,270,000 Assets Initial Capital Purchase of New Capital (2) Banks Liabilities 5,700,000 Initial Deposits 5,700,000 700,000 New Deposits (7) 700,000 6,400,000 Total Net Worth 6,400,000 Total Assets Firms Receipts Expenditures Sales of Consumer Goods (1) 1,600,000 570,000 1,530,000 Rental Payments (3') Wage Payments (4) Returns to Entrepreneurs (5') Total Payments Sales of Capital Goods (2) 700,000 200,000 Total Receipts 2,300,000 2,300,000
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