Related to the Economics in Practice: Where Does eBay Get Counted? In a simple e
ID: 1105815 • Letter: R
Question
Related to the Economics in Practice: Where Does eBay Get Counted? In a simple economy, suppose that all income is ether compensation of employees taxes. All data are in billions of dollars or profts. Suppose also that thene are no indirect t Value $8,500.00 3,000.00 1442.00 1441.50 850.00 11,632.00 3,000.00 1,250.00 3,223.00 935.00 Gross investment Depreciation Profits Exports s you save s for you to en you are he internet. of employees Govemment purchases Direct taxes Saving Imports so Shift-click Using the expenditure approach, GOP is S billon. (Round yourresponse to two decim-places) Using re noome approach, GOP is S billon. (Round yourresponse toho decin'a,pla )Explanation / Answer
Expenditure approach:
GDP=C+I+G+NX(X-M)
GDP=8500+3000+3000+850-835=14515
C=Consumption
I=gross investment
G=Government purchases.
X=exports
M=imports.
Income approach:
NI=W + R + i + PR
Labor Income (W)
Rental Income (R)
Interest Income (i)
Profits (PR)
Labor Income (W):
Salaries, wages, and fringe benefits such as health or retirement. This also includes unemployment insurance and government taxes for Social Security.
Rental Income (R):
This is income received from property received by households. Royalties from patents, copyrights and assets as well as imputed rent are included.
Interest Income (i):
Income received by households through the lending of their money to corporations and business firms. Government and household interest payments are not included in the national income.
Profits (PR):
The amount firms have left after paying their rent, interest on debt, and employee compensation.
Profits=1441.50
Compensation of employees=11,532
NI=11532+1441.50=12973.5
GDP=NI + Indirect Business Taxes + Depreciation
GDP=12973.5+1442=14415.5