Suppose GDP is $15 trillion, with $8 trillion coming from consumption, $2.5 trillion coming from gross investment, $3.5 trillion coming from government expenditures, and $1 trillion coming from net exports. Also suppose that across the whole economy, personal income is $12 trillion. If the government collects $1.5 trillion in personal taxes, then disposable income will be:
A. $13.5 trillion.
B. $12.0 trillion.
C. $10.5 trillion.
D. None of these are correct.
Answer: C. $10.5 trillion.
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Division of labor has caused output to rise dramatically since the industrial revolution.
Answer the following statement true (T) or false (F)
In October 2008, Congress passed the Troubled Asset Relief Program (TARP), under which the Treasury provided ________ to banks in exchange for ________
A) financial advice; promises to expand mortgage lending B) funds; stock C) bonds; cash D) lines of credit; loan guarantees
Everything else held constant, an increase in the required reserve ratio will result in ________ in M1 and ________ in M2
A) an increase; an increase B) an increase; a decrease C) a decrease; an increase D) a decrease; a decrease
To calculate value added, we need to subtract
A) only the cost of domestically-produced intermediate inputs. B) only the cost of foreign-produced intermediate inputs. C) the cost of domestic- and foreign-produced intermediate inputs. D) total imports.