In a simple economy suppose that all income is either compensation of employees or profits. Suppose also that there are no indirect taxes. All data are in billion dollars:Category ValueConsumption 4,500Gross Investment 1,200Depreciation 655Profits 655Exports 500Compensation of Employees 5240Government Purchases 900Direct Taxes 750Saving 546Imports 550

Find GDP using the

(a) expenditure

(b) income approach.

Question

Serenity Velazquez

Business

12 May, 04:07

In a simple economy suppose that all income is either compensation of employees or profits. Suppose also that there are no indirect taxes. All data are in billion dollars:Category ValueConsumption 4,500Gross Investment 1,200Depreciation 655Profits 655Exports 500Compensation of Employees 5240Government Purchases 900Direct Taxes 750Saving 546Imports 550

Find GDP using the

(a) expenditure

(b) income approach.

+1

Answers (1)

Know the Answer?

Brenden · Answer 1

Giving the following information:

Consumption 4,500

Gross Investment 1,200

Depreciation 655

Profits 655

Exports 500

Compensation of Employees 5240

Government Purchases 900

Direct Taxes 750

Saving 546

Imports 550

A) GDP=C+I+G+/-NX

GDP = 4,500 + 1,200 + 900 + 500 - 550 = 6,550

B) GDP Formula = Total National Income + Sales Taxes + Depreciation + Net Foreign Factor Income

GDP = 655 + 750 + 655 + 5,240 = 7,300

Total national income = Sum of rent, salaries, profit.

Sales Taxes = Tax imposed by a government on sales of goods and services.

Depreciation = the decrease in the value of an asset.

Net Foreign Factor Income = Income earn by a foreign factor like the amount of foreign company or foreign person earn from the country and it is also the difference between a country citizen and country earn.