Question

Billion of Dollars

Investment $2,300
Depreciation $1,987
Exports $3,120
Imports $200
Government purchases $4,521
Consumption $6,300
Indirect business taxes and misc. items $1,341
Income received from other countries $1,118
Income paid to other countries $1,022
Employee compensation $8,174
Corporate profits $1,895
Rental income $365
Net interest $903
Proprietors' income $1,343
If you calculate GDP by adding together the final demands of consumers, business firms, the government, and foreigners (i.e., using the expenditure approach), GDP for this economy is $______billion. Given this information, the statistical discrepancy between national income and net national product, obtained when GDP is $________measured using the expenditure approach,

Answer 1

GDP by expenditure method=C+I+G+X-M

=6300+2300+4521+3120-200

=$16,041 billions

GDP at MP by income method= wages+ rent+ interest+ Corporate profit+ Proprietor income+ Depreciation+ indirect business tax

=8174+365+903+1895+1343+1987+1341

=$16,008 billions

Statistical discrepancy= GDP by expenditure method - GDP by income method

=16,008-16041

=$33 billions