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Explain why the Income and Expenditure approach yield the same value for GDP. b) Examine the values for National Income (NI), Personal Income (PI), and Disposable Personal Income (DPI) on Template. Rank them in order from largest to smallest.  Based on the information in the template, list and explain one or two items that are being added or subtracted as we move from NI to PI to DPI.

Explain why the Income and Expenditure approach yield the same value for GDP. b) Examine the values for National Income (NI), Personal Income (PI), and Disposable Personal Income (DPI) on Template. Rank them in order from largest to smallest.  Based on the information in the template, list and explain one or two items that are being added or subtracted as we move from NI to PI to DPI.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Q.01

a) Explain why the Income and Expenditure approach yield the same value for GDP.

b) Examine the values for National Income (NI), Personal Income (PI), and Disposable Personal Income (DPI) on Template. Rank them in order from largest to smallest.  Based on the information in the template, list and explain one or two items that are being added or subtracted as we move from NI to PI to DPI.

Exports Imports Personal Consumption Expenditures 1.1.5 Gross Private Domestic Investment 1.1.5 1.1.5 1.1.5 1.1.5 Government Purchases Gross Domestic Product National Income and Product Accounting (NIPA) 2000Q1 (in billions; nominal) Expenditure Approach Table Row # $ 6,618.20 1,950.70 2 7 22 1,789.90 16 19 1,052.90 1,409.50 10,002.2 % 66% Compensation of employees 20% Rents 18% Interest 11% Proprietor's Income -14% Corporate Profits Income Approach plus: Taxes on production and imports less: Subsidies plus: Business current transfer payments (net) plus: Current surplus of government enterprises National Income Plus: Consumption of Fixed Capital Plus: Statistical Discrepancy Gross National Product Gross National Product Plus: Income payments to the rest of the world Less: Income receipts from the rest of the world 100% Gross Domestic Product Table Row # 1.12 1.12 1.12 1.12 1.12 13 2289 1.12 1.12 12 18 19 1272 1.12 1.12 20 25 $ % 5,749.20 57% 179.8 2% 5% 503.1 720.9 7% 808.5 8% 1.7.5 3 1.7.5 2 698.6 45.1 81 14.8 8,710.8 1.10 21 1,479.00 1.10 24 -154.6 10,035.2 7% 0% 1% 0% 15% -2% 10,035.2 336.2 3% 369.3 4% 10,002.1 100%
Transcribed Image Text:Exports Imports Personal Consumption Expenditures 1.1.5 Gross Private Domestic Investment 1.1.5 1.1.5 1.1.5 1.1.5 Government Purchases Gross Domestic Product National Income and Product Accounting (NIPA) 2000Q1 (in billions; nominal) Expenditure Approach Table Row # $ 6,618.20 1,950.70 2 7 22 1,789.90 16 19 1,052.90 1,409.50 10,002.2 % 66% Compensation of employees 20% Rents 18% Interest 11% Proprietor's Income -14% Corporate Profits Income Approach plus: Taxes on production and imports less: Subsidies plus: Business current transfer payments (net) plus: Current surplus of government enterprises National Income Plus: Consumption of Fixed Capital Plus: Statistical Discrepancy Gross National Product Gross National Product Plus: Income payments to the rest of the world Less: Income receipts from the rest of the world 100% Gross Domestic Product Table Row # 1.12 1.12 1.12 1.12 1.12 13 2289 1.12 1.12 12 18 19 1272 1.12 1.12 20 25 $ % 5,749.20 57% 179.8 2% 5% 503.1 720.9 7% 808.5 8% 1.7.5 3 1.7.5 2 698.6 45.1 81 14.8 8,710.8 1.10 21 1,479.00 1.10 24 -154.6 10,035.2 7% 0% 1% 0% 15% -2% 10,035.2 336.2 3% 369.3 4% 10,002.1 100%
Expenditure Approach Gross Domestic Product Plus: Income receipts from the rest of the world Less: Income payments to the rest of the world Gross National Product Gross National Product Less: Consumption of Fixed Capital Less: Statistical Discrepancy National Income National Income Less: Income earned but not received Plus: Income received but not earned Personal Income Personal Income Less: Personal Current Taxes Disposable Personal Income Table Row # National Income and Product Accounting (NIPA) 2000Q1 (in billions; nominal) 2.1 2.1 $ 10,002.2 369.3 336.2 10,035.3 26 10,035.3 1,479.0 -154. 8,710.9 8,710.9 2,757 2,489 1 8,443.3 8,443.3 1208.8 7,234.5 Income Approach Corporate Profits Taxes on production & imports less subsidies Contributions for government social insurance Net interest Business curent transfer payments Current surplus of government enterprises Income earned but not received Personal income receipts on assets Personal current transfer receipts Income received but not earned Personal Income Disposable Personal Income Table Row # 1.7.5 19 1.7.5 23 1.7.5 24 1.7.5 25 2.1 27 $ 808.5 653.5 696.0 503.1 81.0 14.8 2,756.9 1,432.6 1,056.7 2,489.3 8,443.3 7,234.6
Transcribed Image Text:Expenditure Approach Gross Domestic Product Plus: Income receipts from the rest of the world Less: Income payments to the rest of the world Gross National Product Gross National Product Less: Consumption of Fixed Capital Less: Statistical Discrepancy National Income National Income Less: Income earned but not received Plus: Income received but not earned Personal Income Personal Income Less: Personal Current Taxes Disposable Personal Income Table Row # National Income and Product Accounting (NIPA) 2000Q1 (in billions; nominal) 2.1 2.1 $ 10,002.2 369.3 336.2 10,035.3 26 10,035.3 1,479.0 -154. 8,710.9 8,710.9 2,757 2,489 1 8,443.3 8,443.3 1208.8 7,234.5 Income Approach Corporate Profits Taxes on production & imports less subsidies Contributions for government social insurance Net interest Business curent transfer payments Current surplus of government enterprises Income earned but not received Personal income receipts on assets Personal current transfer receipts Income received but not earned Personal Income Disposable Personal Income Table Row # 1.7.5 19 1.7.5 23 1.7.5 24 1.7.5 25 2.1 27 $ 808.5 653.5 696.0 503.1 81.0 14.8 2,756.9 1,432.6 1,056.7 2,489.3 8,443.3 7,234.6
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