Calculating GDP and national income?
gross private domestic investment 120 consumption of fixed capital 35 exports 60 imports 55 government puchases 130 personal consumption expenditures 325 taxes on production and imports 20 social security contributions 33 corporate income taxes 13 undistributed coporate profits 4 transfer payments 65 personal taxes 90 compensation of employes 380 corporate profits 80 rents 25 interest 35 proprietors income 5 net foreign factor income 45 calculate gdp a. 590 b. 580 c. 545 Use the follwing table to derive NDP and national income. GDP minus ____ NDP plus _____ national income
Why the national income is measured at factors price and not at market price?
Net National Product at factor cost (NNPfc) is technically called National Income.But we also have NNP at market price or NNPmp.But the problem with market price is that market price is determined by net effect of Indirect Taxes and Subsidies, and both Indirect Taxes and Subsidies are kind of transfer payments and not factor payments, and these are made by the govt and not by the factors of production.So Market Price does not show the actual contribution of the factors of production in the value of goods and services produced.But when income is determined as sum of factor payments made, it exactly shows the actual contribution by different factors in production of goods and services, and hence presents a more fair picture of actual productive activities in the economy.Example -Country A and B produced goods of factor cost $100.Suppose Net Indirect Taxes (tax-subsidies) in country A is $20 and in country B is $5.NNPmp of A is $120 and of B is $105.But actual production was same $100.Hence it is not fair to compare National Income at MP because the difference is just caused by taxes and subsidies, and not actual production.So, NNPfc is better than NNPmp.
Suppose the economy is characterized by the following behavioural equations: C=160+0.6Yd , I=150, G=150, T=100?
I a) Y = C + I + G C = 160+0.6(Y-T) I = 150 G = 150 T = 100 C = 160+0.6(Y-100) = 100+0.6Y Y = 100+0.6Y+150+150 = 400+0.6Y 0.4Y = 400 Y = 1000 b) Yd = Y-T = 1000-100 = 900 c) C = 100+0.6Y = 100+ 0.6*1000 = 100+600 = 700 II G = 110 (G actually falls for 110-150=-40, not increases) 0.4Y = 360 Y = 900 III S = Y-C-G = 900-100-0.6*900-110 = 900-750 = 150 IV S=I 150=150
According to the Keynesian analysis, if government expenditures and taxes increased by the same amount, which of the following will occur?
When government purchases increase, the total income increases, which increases aggregate demand. When income increases, consumption also increases. When consumption increases, income increases, and so on… You can see the multiplier effect of government purchases on total income.∆Y/∆G is the government-purchases multiplier, which measures how much the income changes (∆Y) when government purchases change (∆G). MPC is the marginal propensity to consume, which tells us how much people consume per every $1 increase in income.Equation: ∆Y = ∆G/(1-MPC).So, an increase in government purchases of ∆G increases the income by ∆G/(1-MPC).There is a similar multiplier for taxes.∆Y = -(MPC*∆T)/(1-MPC)The equation is different because taxes directly affect consumption, unlike government spending, which first increases income, which then increases consumption. Spending $1 on government purchases increases income by $1 before the multiplier effects. Raising taxes by $1 decreases income by less than $1 depending on how much consumers save before the multiplier effects. So, an equal increase in government spending and taxes actually raises income and thus aggregate demand increases.Mathematically:Add the two multiplier effects∆Y = [∆G/(1-MPC)] + [-(MPC*∆T)/(1-MPC)]∆G = ∆T since government spending increases by same amount as tax increase∆Y = ∆G*[(1/(1-MPC)) - (MPC/(1-MPC))]∆Y = ∆GSo income increases by amount of government purchases, which is positive, increasing aggregate demand.
Please macroeconomics help ?
.#1 C.would not be included in GDP because they are transfer payments. .#2. C.households and noncorporate businesses have left after paying taxes and non-tax payments to the government. .. Doesn't fit my screen - split by parts pls. ;)