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Item Amount (in millions of dollars) 1
Item Amount (in millions of dollars) 1. Wages and salaries 25,000 2. Interest income 1,000 3. Personal consumption 19,500 4. Personal saving 150 5. Personal income taxes 150 6. Government purchases 5,000 7. Indirect taxes 875 8. Subsidies 150 9. Business profits 2,325 10. Exports 1,750 11. Net private investment 4,750 12. Imports 1,950 13. Depreciation 750
a) Which row numbers are included in the Expenditure approach of GDP calculation? And how much is GDP in this approach?
b) Which row numbers are included in the Income approach of GDP calculation? ? And how much is GDP in this approach?
c) Which row numbers are included in domestic income at factor cost? And which row number are included in domestic income non factor cost?
Expert Solution
a) Raw Numbers included in the Expenditure Approach of GDP Calculation:
3,6,10,11,12,13
GDPMP = Private final consumption expenditure + Government final consumption expenditure + Gross domestic capital formation + Net Exports
= 19500 + 5000 + ( 4750 + 750 ) + (1750 - 1950)
= 29800
b) Raw Numbers included in the Income Approach of GDP Calculation:
1,2,7,8,9,13
NDPFC = Compensation of Employees + Rent and Royalty + Interest + Profit + Mixed Income
= 25000 + 0 + 1000 + 2,325
= 28325
GDPMP = NDPFC + Depreciation + NIT
= 28325 + 750 + (875 - 150)
= 29800
c) Raw Numbers included in the Domestic Income at Factor Cost:
1,2,9
NDPFC = Compensation of Employees + Rent and Royalty + Interest + Profit + Mixed Income
= 25000 + 0 + 1000 + 2,325
= 28325
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