Please answer the last two questions Consider the following

Please answer the last two questions:

Consider the following hypothetical data for the U.S. economy in 2018 (in trillions of dollars), and assume that there are no statistical discrepancies or other adjustments Category Value Category Value Profits Indirect business taxes and transfers Rent Interest Wages Depreciation Consumption $2.5 Exports 0.6 Government transfer payments 0.8 Personal income taxes and nontax payments 0.8 Imports 8.1 Corporate taxes and retained earnings 1.3 Social security contributions 9.2 Government spendin 0.5 2.2 a. Calculate the gross domestic income. $ 14.1 trillion. (Enter your response rounded to one decimal place.) Calculate GDP $ 14.1 trillion. (Enter your response rounded to one decimal place.) b. Calculate gross private domestic investment. $ 3.6 trillion. (Enter your response rounded to one decimal place.) c. Based on the above information, calculate personal income.$ trillion. (Enter your response rounded to one decimal place.) Calculate personal disposable income. trillion. (Enter your response rounded to one decimal place.)

Solution

(a) GDI = Rent + Wages + Profit + Interest + Depreciation + Indirect Business Taxes and Transfers

             = 0.8 + 8.1 + 2.5 + 0.8 + 1.3 + 0.6

             = $14.1 trillion

    GDP = Consumption + Gross Private Domestic Investment + Government Spending + Exports Imports

            = 9.2 + Gross Private Domestic Investment + 1.6 + 1.3 1.6

            = 10.5 + Gross Private Domestic Investment

We know, GDP = GDI = $14.1 trillion

(b) Gross Private Domestic Investment = 14.1 - 10.5 = $3.6 trillion

(c) Personal Income = [[GDI + Government Transfer Payment – (Depreciation + Indirect Business Taxes & transfers + Corporate Taxes and Retained Earnings + Social Security Contributions)]]

                 = [14.1 + 2.1 – (1.3 + 0.6 + 0.5 + 2.2]

                = $11.6 trillion.

Personal Disposable Income = Personal Income Personal Income Taxes and Nontax Payments.

                                              = 11.6 1.8 = $9.8trillion