Page 220 - DECO405_MANAGERIAL_ECONOMICS

Unit 13: Basic National Income Concepts

U.S. exports 249.00 Notes
Personal consumption expenditures 475.00
Net foreign factor income earned 5.00
Gross private domestic investment 300.00
Indirect business taxes 245.00
Undistributed corporate profits 60.00
Social security contributions 240.00
Corporate income taxes 65.00
(a) What is the Personal income?

(b) What are the gross and net domestic products?
(c) Calculate the disposable income.
5. In the national income and product accounts (NIPAs), growth in real imports of services
has been slowing since 2000, and 2003 showed no growth. Yet, we know that outsourcing
has been growing dramatically. Does this imply that the NIPAs are failing to capture the
effects of outsourcing?
6. Given the following data about the economy:

Consumption 7000
Investment 5000
Proprietor’s income 2500
Corporate income taxes 2150
Govt expenditure 3000
Profits 2500
Wages 7000
Net exports 2750
Rents 250
Depreciation 250
Indirect business taxes 1000
Undistributed corporate profits 600
Net foreign factor income 30
Interest 1500
Social security contribution 0
Transfer payments 0
Personal taxes 1650

(a) Calculate GDP and GNP.
(b) Calculate NDP, NNP, NI and domestic income.
7. Suppose capital stock of an economy is worth 200 million and it depreciates at the rate of
10 per cent per annum. Indirect taxes amount to 30 million, subsidies amount to 15
million. Its GNP at market prices is 1200 million. Calculate the national income. (NNP at
factor cost is termed national income).

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