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Below is a list of domestic output and national income figures for a given year. All figures are in billions. The questions that follow ask you to determine the major national income measures by both the expenditure and income methods. The results you obtain with the different methods should be the same. (Hint: Use Figure 8-3 and Table 8-2 of the text as a guide).
Personal consumption expenditures
Net US income earned abroad
Government transfer payments
Rents
Statistical discrepancy
Consumption of fixed capital (depreciation)
Social security contributions
Interest
Proprietors’ income
Net exports
Business transfers
Compensation of employees (wages)
Indirect business taxes
Corporate retained earnings
Personal income taxes
Corporate income taxes
Corporate profits (after taxes)
Government purchases
Net private domestic investment (excluding depreciation)
Other business income adjustments
$245
4
12
14
4
27
20
13
33
11
12
223
18
21
26
19
37
72
33
4
a. Using the above data, determine GDP by both the expenditure and the income approaches. Then determine NDP.
b. Now determine NI: first, by making the required additions and subtractions from GDP; and second, by adding up the types of income and taxes that make up NI.
c. Adjust NI (from part b) as required to obtain PI.
d. Adjust PI (from part c) as required to obtain DI.