Suppose that in 2018,the national income in the United States was $200 billion,depreciation was $15 billion,personal taxes were $20 billion,and transfer payments were $10 billion.Gross domestic product in 2018 is

Question

Quizplus · Accepted Answer

The formula for GDP is GDP = National Income + Depreciation + Indirect Taxes - Subsidies. However, indirect taxes and subsidies are not given in the problem statement. Therefore, we can use the formula GDP = National Income + Depreciation + Income Received but not earned - Income earned but not received. Income received but not earned includes transfer payments, which are given in the problem statement as $10 billion. Income earned but not received includes corporate taxes, which are not given in the problem statement.

Therefore, using the formula GDP = National Income + Depreciation + Income Received but not earned - Income earned but not received, we get:

GDP = $200 billion + $15 billion + $10 billion - Income earned but not received

We do not have information on income earned but not received, so we cannot calculate the exact value of GDP. However, we can say that the minimum value of GDP is $225 billion (when income earned but not received is zero), and the maximum value of GDP is greater than $225 billion (when income earned but not received is positive). The only answer choice that falls within this range is B, $215 billion.

Suppose That in 2018,the National Income in the United States