Over the year, the workers of the country earned 50 in wages. Further, 5 came in net labor and capital payments from abroad. The population consumed 70. The government spent 35. The
set up the expenditure and the
Plug in the values from the prompt.
Use them to find the capital income (same as the rent).
Expenditure equation: C + I + G + (X-M) = Y
National income equation: Y = W + NLP + T - D
Where: C = consumption (70) I = investment (25) G = government spending (35) X = exports M = imports (10) W = wages (50) NLP = net labor and capital payments from abroad (5) T = indirect taxes (15) D = depreciation (20)
So, substituting the values: C + I + G + (X-M) = 70 + 25 + 35 + (X - 10) = 130 + (X - 10) = Y
And, Y = W + NLP + T - D Y = 50 + 5 + 15 - 20 = 50
So, the expenditure equation and the national income equation both equal to 50.
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