Question

Using the following national income accounting data, compute (a) GDP, (b) NDP, and (c) NI. All figures are in billions.

Short answer

1. The gross domestic product of the economy for the year is $343.7 billion.

2. The NDP of the economy is $331.9 billion.

3. The economy’s national income is $329.7 billion.

Step-by-step solution

Explanation for part (a)

GDP = Personal consumption expenditures + Government purchases + Net private domestic investment + Depreciation + US exports of goods and services – US imports of goods and services

GDP = 219.1 + 59.4 + 52.1 + 11.8 + 17.8 – 16.5

GDP = 343.7

Therefore, the economy’s GDP is $343.7 billion.

Explanation for part (b)

NDP = GDP – Depreciation

NDP = 343.7 – 11.8

NDP = 331.9

Therefore, the economy’s NDP is $331.9 billion

Explanation for part (c)

NI = GDP + NFFI – Depreciation – Statistical Discrepancies

NI = 343.7 – 2.2 – 11.8

NI = 329.7

The national income of the economy is $327.9 billion.