Question

You are given the following information about a country:

Billions ($)

Receipts of factor income from the rest of the world 25

Indirect taxes 60

Corporate profits 80

Net interest 15

Depreciation 150

Compensation of employees 850

Net business transfer payments 20

Amount of national income not going to households 100

Proprietor’s income 220

Personal income taxes 200

Rental income 35

Subsidies 30

Payments of factor income to the rest of the world 45

Surplus of Governmental Enterprises 50

Using the information provided on the table above to compute the following (Show your work

and formulas).

a. National Income

b. Gross National Product

c. Gross Domestic Product

d. Disposable Personal Income

Please don't forget the formulas. thank you

Answer 1

a.National Income=Gross National Product-Depreciation-Indirect taxes=1410-150-60=1200

b.Gross National Product=Gross Domestic Product-(Receipts of factor income from the rest of the world -Payments of factor)+ income to the rest of the world)=1390-(25-45)=1410

c.Gross Domestic Product=(Receipts of factor income from the rest of the world -Payments of factor)+ income to the rest of the world)+Indirect taxes+Corporate profits+Net interest+ Depreciation+Compensation of employees+Net business transfer payments+Amount of national income not going to households+Proprietor’s income-Personal income taxes+Rental income-Subsidies+Surplus of Governmental Enterprises=(25-45)+60+80+15+150+850+20+100+220-200+35-30+50=1390

d. Disposable Personal Income=National Income-Amount of national income not going to households-Personal income taxes=1200-100-200=900