Scenario 5.1 Suppose that personal income is $250 billion.Furthermore, assume that retained corporate earnings are $2 billion, Social security taxes are $15 billion, Social security benefit checks equal $16 billion, the capital consumption allowance is $32 billion, and corporate taxes amount to $40 billion.
Refer to Scenario 5.1.The national income of this nation will be:

Question

Quizplus · Accepted Answer

National income is calculated by adding personal income, corporate profits, and government transfer payments (such as social security benefit checks) while subtracting taxes and the capital consumption allowance. Therefore, the national income in this scenario would be:

$250 billion (personal income) + $2 billion (retained corporate earnings) + $16 billion (social security benefit checks) - $15 billion (social security taxes) - $40 billion (corporate taxes) - $32 billion (capital consumption allowance) = $251 billion.