Personal consumption expenditures $245
Net foreign factor income 4
Transfer payments 12
Rents 14
Statistical discrepancy 8
Consumption of fixed capital (depreciation) 27
Social Security contributions 20
Interest 13
Proprietors’ income 33
Net Exports 11
Dividends 16
Compensation of employees 223
Taxes on production and imports 18
Undistributed corporate profits 21
Personal taxes 26
Corporate income taxes 19
Corporate profits 56
Government purchases 72
Gross private domestic investment 60
Personal saving 20
Using the table above, calculate Gross Domestic Product using the expenditures approach.
GDP =
To calculate Gross Domestic Product (GDP) using the expenditures approach, you need to add up all the components of expenditure in the table. These components include personal consumption expenditures, gross private domestic investment, government purchases, and net exports.
GDP = Personal consumption expenditures + Gross private domestic investment + Government purchases + Net exports
From the table:
Personal consumption expenditures = $245
Gross private domestic investment = $60
Government purchases = $72
Net exports = Net exports = Net exports = Exports - Imports = ($11 - $0)
Therefore,
Net exports = $11 - $0 = $11
Now, calculating GDP:
GDP = $245 + $60 + $72 + $11
GDP = $388
So, using the expenditures approach, the Gross Domestic Product (GDP) is $388.