D Compare GDP, National Income, Personal Income, and Personal Disposable Income

Question 1

GDP ( as expenditure approach)

Answer 1

Y = C+I+G+NX

Question 2

GDP (national income; income approach)

Answer 2

Y = National income + Capital consumption allowance; depreciation (measures the amount that would have to be reinvested to maintain the productivity of physical capital from one period to the next) + statistical discrepancy; adjustment between Expenditure approach and Income approach

National income: Sum of income received by all factors of production that go into the creation of final output

Question 3

Personal Income(measures household pretax income)

Answer 3

A determinant of consumer purchasing power and consumption

Contrast to National Inc: Personal inc includes all payments a household receives including transfer payments, excludes anything business tax or profit that doesn’t go to a household.

Question 4

Personal Disposable Income

Answer 4

Personal Income after Taxes; Amount households have for savings or consumption

Indicates the ability of consumers to save or spend

PDI = Personal INC - Personal T