18. The following is a list of figures for a given year in billions of dollars. Using this data, compute: (a) GDP; (b) NDP; (c) NI; (d) PI; (e) DI; (f) Net exports.

Transfer payments $ 16
Government purchases 80
Personal taxes 38
Corporate income taxes 28
Indirect business taxes 15
Social security contributions 8
Undistributed corporate profits 19
Proprietor’s income 25
Compensation of employees 258
Personal consumption expenditures 322
Consumption of fixed capital 4
Rents 10
U.S. exports 14
Corporate profits 70
Interest 12
Dividends 23
Imports to U.S. 17
Gross private domestic investment 63
Net foreign factor income earned in the U.S. 10

19. Which of the following are included and which are excluded in calculating this year’s GDP? Explain in each instance.

(a) A monthly scholarship check received by an economics student

(b) The purchase of a new corncrib by a farmer

(c) The purchase of a used tractor by a farmer

(d) The cashing in of a savings bond

(e) The services of a mechanic in fixing the radiator in his own car

(f) Social security checks received by a retired person

(g) An increase in business inventories

(h) Government purchase of missiles

(i) A barber’s income

(j) Income received from interest on a corporate bond

(k) Cash received from selling a corporate bond

To quote one of our very good math and science tutors: “You will find here at Jiskha that long series of questions, posted with no evidence of effort or thought by the person posting, will not be answered. We will gladly respond to your future questions in which your thoughts are included.”

If a country is currently producing 11 units of health care and 16 units of education, what is the opportunity cost of producing 5 more units of education?

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If a country is currently producing 11units of health care and 16 units of education, what is the opportunity cost of producing 5 more units of education

what is the gdp

300

To compute the various components of GDP, NDP, NI, PI, DI, and net exports, we need to understand the definitions and formulas related to these concepts.

(a) GDP (Gross Domestic Product) is the total market value of all final goods and services produced within a country's borders in a given time period. It can be calculated using the expenditure approach: GDP = C + I + G + (X - M)

Where:
- C refers to personal consumption expenditures (consumption by households)
- I refers to gross private domestic investment (investment in capital goods, residential and non-residential structures, and changes in inventories)
- G refers to government purchases (government spending on goods and services)
- X refers to exports (sales of domestic goods and services to foreign countries)
- M refers to imports (purchases of foreign goods and services)

Using the given data:
C = Personal consumption expenditures = $322 billion
I = Gross private domestic investment = $63 billion
G = Government purchases = $80 billion
X = U.S. exports = $14 billion
M = Imports to U.S. = $17 billion

Substituting these values into the GDP formula:
GDP = $322 + $63 + $80 + ($14 - $17) = $462 billion

Therefore, the GDP for the given year is $462 billion.

(b) NDP (Net Domestic Product) is GDP minus depreciation or the value of consumption of fixed capital. It measures the net value of all final goods and services produced within a country's borders after accounting for wear and tear on capital goods.

Using the given data:
Consumption of fixed capital = $4 billion

Calculating NDP:
NDP = GDP - Consumption of fixed capital = $462 - $4 = $458 billion

Therefore, the NDP for the given year is $458 billion.

(c) NI (National Income) is the total income earned by individuals and businesses within a country's borders. It can be calculated by adding compensation of employees, proprietors' income, corporate profits (after taxes), and rental income to NDP. Undistributed corporate profits and net foreign factor income earned in the U.S. are subtracted from NI.

Using the given data:
Compensation of employees = $258 billion
Proprietor's income = $25 billion
Corporate profits = $70 billion
Undistributed corporate profits = $19 billion
Net foreign factor income earned in the U.S. = $10 billion

Calculating NI:
NI = Compensation of employees + Proprietor's income + Corporate profits + Rental income + Net foreign factor income - Undistributed corporate profits
= $258 + $25 + $70 + $10 - $19 = $344 billion

Therefore, the NI for the given year is $344 billion.

(d) PI (Personal Income) is the total income received by individuals before personal taxes are paid. It can be calculated by subtracting personal taxes from NI and adding transfer payments.

Using the given data:
Personal taxes = $38 billion
Transfer payments = $16 billion

Calculating PI:
PI = NI - Personal taxes + Transfer payments
= $344 - $38 + $16 = $322 billion

Therefore, the PI for the given year is $322 billion.

(e) DI (Disposable Income) is the income available to individuals after personal taxes are paid. It can be calculated by subtracting personal taxes from PI.

Using the given data:
Personal taxes = $38 billion

Calculating DI:
DI = PI - Personal taxes
= $322 - $38 = $284 billion

Therefore, the DI for the given year is $284 billion.

(f) Net exports refers to the value of exports minus the value of imports. It can be calculated using the formula: Net exports = X - M

Using the given data:
X = U.S. exports = $14 billion
M = Imports to U.S. = $17 billion

Calculating net exports:
Net exports = $14 - $17 = -$3 billion

Therefore, the net exports for the given year are -$3 billion.

Now, moving on to the second question about what is included and excluded in calculating this year's GDP:

(a) A monthly scholarship check received by an economics student:
This would be included in GDP as it represents an income received by an individual.

(b) The purchase of a new corncrib by a farmer:
This would be included in GDP as it represents an investment in a capital good.

(c) The purchase of a used tractor by a farmer:
This would not be included in GDP as it represents a transfer of a previously produced good and does not contribute to current production.

(d) The cashing in of a savings bond:
This would not be included in GDP as it represents a transfer of financial assets and does not contribute to current production.

(e) The services of a mechanic in fixing the radiator in his own car:
This would not be included in GDP as it is a non-market activity and does not involve a transaction.

(f) Social security checks received by a retired person:
This would be included in GDP as it represents an income received by an individual.

(g) An increase in business inventories:
This would be included in GDP as it represents an accumulation of goods produced, which will be sold in the future.

(h) Government purchase of missiles:
This would be included in GDP as it represents government spending on goods and services.

(i) A barber's income:
This would be included in GDP as it represents income earned by an individual providing a service.

(j) Income received from interest on a corporate bond:
This would be included in GDP as it represents income earned by an individual.

(k) Cash received from selling a corporate bond:
This would not be included in GDP as it represents a transfer of financial assets and does not contribute to current production.