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Expenditures Approach:

Gross Domestic Product (GDP) = C + I g+ G + Xn

Personal Consumption Expenditures (C)

Durable Consumer Goods (3 years or more)

Nondurable Consumer Goods (less than three years)

Consumer Expenditures for Services

Gross Private Domestic Investment (Ig)

Machinery, Equipment, Tools

All Construction (Residential and Business)

Inventory Changes

Government Purchases (G)

Net Exports (Xn)

Exports (X) - Imports (M)

Income (Earnings) Approach:

Add: "WRIPPT"

Compensation of Employees (Wages)

Rents

Interest

Proprietors' Income

Corporate Profits (Retained earnings, dividends, corporate taxes)

Taxes on Production and Imports

Equals: National Income:

Three changes:

Less: Net Foreign Factor Income (Income earned by Americans abroad minus income earned by foreigners in U.S)

Add: Statistical Discrepancy

Consumption of Fixed Capital (Depreciation)

Equals: Gross Domestic Product

Other significant numbers:

Start with Gross Domestic Product (GDP)

Less: Capital Consumption (Depreciation)

Equals: Net Domestic Product (NDP)

Less: Statistical Discrepancy

Add: Net Foreign Factor Income

Equals: National Income (NI)

Less: Taxes on Production and Imports

Social Security Contributions (Payroll Taxes)

Corporate Income Taxes

Undistributed Corporate Profits (Retained Earnings)

Add: Transfer Payments

Equals: Personal Income (PI)

Less: Personal Taxes

Equals: Disposable Income (DI) (Note: DI =C+S)

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Q: In macro economic how you find out GDP?
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