Suppose that in 2016,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 2016 is

Question

Quizplus · Accepted Answer

Gross domestic product (GDP) is calculated by adding all of the components of national income: consumption (C), investment (I), government spending (G), and net exports (NX). In this case, we can calculate GDP as follows:

GDP = C + I + G + NX

We are not given the values of C, I, or NX, but we can calculate G by subtracting depreciation, personal taxes, and transfer payments from national income:

G = National income - Depreciation - Personal taxes - Transfer payments
G = $200 billion - $15 billion - $20 billion - $10 billion
G = $155 billion

Therefore, GDP = C + I + $155 billion + NX. We don't have enough information to calculate C, I, or NX, but we know that GDP is at least $155 billion. Since none of the answer choices are below $155 billion, we can eliminate answer choice A) and choose B) $215 billion as the best answer.

Suppose That in 2016,the National Income in the United States