Real GDP in the United States
A) exceeds disposable personal income by 40 percent, because GDP includes taxes, retained earnings, and depreciation expenditures that are not part of personal income.
B) falls short of disposable personal income by 40 percent, because personal income includes transfer payments that are not directly linked to production.
C) almost exactly equals disposable personal income, because depreciation expenses are such a small fraction of gross investment in most years.
D) exceeds disposable personal income by over 50 percent because of the size of the federal budget.
E) none of the above.

Question

Quizplus · Accepted Answer

GDP includes taxes, retained earnings, and depreciation expenditures that are not part of personal income.