In a simple economy, suppose that all income is either compensation of employees or profits. Suppose also that there are no indirect taxes. Calculate gross domestic product from the following set of numbers. Show that the expenditure approach and the income approach add up to the same figure.

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Chapter1: Making Economics Decisions
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Question 1
In a simple economy, suppose that all income is either
compensation of employees or profits. Suppose also that
there are no indirect taxes. Calculate gross domestic
product from the following set of numbers. Show that the
expenditure approach and the income approach add up to
the same figure.
Consumption
$9500 Investment
$3000
Depreciation
$1750 Profits
$2400
Exports
$850
Compensation of
employees $11500
Government purchases
$3200
Direct taxes
$1200
Saving
$1600
Imports
$900
Transcribed Image Text:Question 1 In a simple economy, suppose that all income is either compensation of employees or profits. Suppose also that there are no indirect taxes. Calculate gross domestic product from the following set of numbers. Show that the expenditure approach and the income approach add up to the same figure. Consumption $9500 Investment $3000 Depreciation $1750 Profits $2400 Exports $850 Compensation of employees $11500 Government purchases $3200 Direct taxes $1200 Saving $1600 Imports $900
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