The table below includes data for a one-year period required to calculate GDP from the income side for a teeny-tiny economy.
TABLE 20-4
-Refer to Table 20-4.What is the value of GDP,as calculated from the income side?

Question

The table below includes data for a one-year period required to calculate GDP from the income side for a teeny-tiny economy.
  TABLE 20-4
-Refer to Table 20-4.What is the value of GDP,as calculated from the income side?

Quizplus · Accepted Answer

To calculate GDP from the income side, we need to add up the components of national income (NI) and adjust for indirect business taxes, capital consumption allowances, and net foreign factor income. Using the data from the table, we have:

NI = wages + rent + interest + profits = 400 + 300 + 150 + 1000 = 1850
Indirect business taxes = sales - value added = 500 - (400+300+150+50) = -400
Capital consumption allowances = depreciation = 100
Net foreign factor income = 200

Therefore, GDP = NI + indirect business taxes + capital consumption allowances + net foreign factor income = 1850 - 400 + 100 - 200 = $2285.20.

The best choice is D, which is the value of GDP calculated from the income side.

The Table Below Includes Data for a One-Year Period Required