ECON 209 Lecture Notes - Lecture 4: Transfer Payment, Disposable And Discretionary Income, Unemployment Benefits

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orangemammoth689

9 Dec 2016

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22 addi(cid:374)g gover(cid:374)(cid:373)e(cid:374)t a(cid:374)d trade to the. Difference between government purchases of goods and services / transfer payments: Purchases of goods and services (e. g. buy office supplies): add directly to the demands for the. Transfer payment (employment insurance): government expenditures place no direct demand on economy"s current output of good and services. the nation"s production of good and services since they transfer funds to the recipients/firms. If firms and household"s spend some of these payments on consumption and investment = Desired government expenditure (g) are part of aggregate desired expenditure. Assumption: level of govern ment purchases (g) is autonomou s. any chan ges in g are a result of a govern ment p olicy decision. part of the aggregate expenditure. (subsidies) Net tax revenue (t): total tax revenue minus transfer payments: taxes reduce households" disposable income relative to national income, transfer payment raise disposable income relative to national income.

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Specify the following using the information in table 6.4. (Quantities are given in millions of dollars)

Gross private domestic investment = 586.1

Inventory investment = 30.9

Compensation of employees = 5,178.6

Corporate taxes = 215.9

Macro via exports of good and services = 380.4

Depreciation = 643.5

Personal taxes = 600.0

Personal consumption expenditures = 3,514.8

Government purchases of goods and services = 1,589.7

Indirect business taxes minus subsidies = 489.6

Net factor payments to the rest of the world = -17.3

Residential construction = 453.7

Corporate profits minus dividends = 45.7

Government transfer payments and interest = 337.1

Macro via import of goods = 285.0

Social transfer payments = 441.7

Specify:

Private investment, GDP, GNP, NNP, national income, and personal income.

chocolatebeaver365

To the right is a list of domestic output and national income figures for a certain year. All figures are in billions. The questions that follow ask you to determine the major national income measures by both the expenditures and the income approaches. The results you obtain with the different methods should be the same.

1. compensation of employees- $194.2
2. U.S exports of goods and services- $17.8
3. consumption of fixed capital- $11.8
4. government purchases- $59.4
5. taxes on production and imports- $14.4
6. net private domestic investment- $52.1
7. transfer payments- $13.9
8. U.S imports of goods and services- $16.5
9. personal taxes- $40.5
10. net foreign factor income- $2.2
11. personal consumption expenditures- $219.1
12. statistical discrepancy- $0

a. Using the above data, determine GDP by both the expenditures and the income approaches. Then determine NDP.

b. Now determine NI in two ways: first, by making the required additions or subtractions from NDP; and second, by adding up the types of income and taxes that make up NI.

c. Adjust NI (from part b) as required to obtain PI.

d. Adjust PI (from part c) as required to obtain DI.

jadehedgehog412

Question 1 Gross domestic product (GDP) measures the economy's production of

A) final goods and services.

B) intermediate goods.

C) consumer goods and services.

D) capital goods.

Question 2 Because GDP is measured in dollars per year, GDP is called a

A) stock.

B) flow.

C) cycle.

D) chain.

Question 3 Which of the following would not be included in the gross private domestic investment (I) category of GDP?

A) A retailer's additions to its inventories.

B) A bakery's purchase of a new oven.

C) A trader's purchase on NASDAQ stocks.

D) Newly built residential construction.

Question 4 Which of the following government payments would be included in the government consumption expenditures and gross investment (G) category of GDP?

A) A firefighter's monthly paycheck.

B) A retired grandmother's Social Security check.

C) A retired colonel's veteran's benefits.

D) A laid-off auto worker's unemployment conpensation check.

Question 5 The largest component in the income approach to measuring GDP is

A) compensation of employees.

B) rents.

C) profits.

D) net interest.

Question 6 Which approach to calculating GDP attempts to measure employee compensation, rents, profits, and net interest?

A) The circular-flow approach.

B) The product-market approach.

C) The income approach.

D) The expenditure approach.

Question 7 In recent years, people have benefited from greater amounts of leisure time. This trend

A) has caused GDP to rise.

B) has caused GDP to fall.

C) made GDP fluctuate randomly.

D) is not accounted for in the GDP statistic.

Question 8 National income (NI) is calculated by adjusting GDP for

A) depreciation of capital.

B) investment and net exports.

C) Social Security insurance contributions and transfer payments.

D) corporate and personal income taxes.

Question 9 If an economy's real GDP has increased, we can conclude that the economy

A) is inflationary.

B) has increased its production.

C) suffers from recession.

D) needs a tax cut.

Question 10 In the circular flow model, investment, government spending, and exports are classified as

A) injections.

B) leakages.

C) transfers.

D) consumption expenditures.

ECON 209 Lecture Notes - Lecture 4: Transfer Payment, Disposable And Discretionary Income, Unemployment Benefits

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