Question

Suppose GDP is $15 trillion, with $8 trillion coming from consumption, $2.5 trillion coming from gross investment, $3.5 trillion coming from government expenditures, and $1 trillion coming from net exports. Also suppose that across the whole economy, personal income is $12 trillion. If the government collects $1.5 trillion in personal taxes, then disposable income will be:

Answer 1

$10.5 trillion

Step-by-step explanation:

Given that,

GDP = $15 trillion

Consumption = $8 trillion

Gross investment = $2.5 trillion

Government expenditures = $3.5 trillion

Net exports = $1 trillion

Personal income = $12 trillion

Personal taxes = $1.5 trillion

Therefore, the personal disposable income is calculated as follows:

= Personal income - Personal taxes

= $12 trillion - $1.5 trillion

= $10.5 trillion