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Identify which of the following measures are used to calculate national income.     a. Personal consumption expenditures:       b. Net foreign factor income:      c. Transfer payments:      d. Rents:      e. Consumption of fixed capital (depreciation):      f. Statistical discrepancy:      g. Social Security contributions:      h. Interest:      i. Proprietors’ income:      j. Net exports:      k. Dividends:      l. Compensation of employees:      m. Taxes on production and imports:      n. Undistributed corporate profits:      o. Personal taxes:      p. Corporate income taxes:      q. Corporate profits:      r. Government purchases:      s. Net private domestic investment:      t. Personal saving:      u. Gross private domestic investment:

Question

Identify which of the following measures are used to calculate national income.     a. Personal consumption expenditures:       b. Net foreign factor income:      c. Transfer payments:      d. Rents:      e. Consumption of fixed capital (depreciation):      f. Statistical discrepancy:      g. Social Security contributions:      h. Interest:      i. Proprietors’ income:      j. Net exports:      k. Dividends:      l. Compensation of employees:      m. Taxes on production and imports:      n. Undistributed corporate profits:      o. Personal taxes:      p. Corporate income taxes:      q. Corporate profits:      r. Government purchases:      s. Net private domestic investment:      t. Personal saving:      u. Gross private domestic investment:

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Solution

The measures used to calculate national income include:

a. Personal consumption expenditures: Yes, this is a part of the national income as it includes all expenditures by households on goods and services.

b. Net foreign factor income: Yes, this is included in the national income as it accounts for the income from foreign countries.

c. Transfer payments: No, these are not included in the national income as they are not payments for goods or services.

d. Rents: Yes, this is included in the national income as it is a payment for the use of resources.

e. Consumption of fixed capital (depreciation): Yes, this is included in the national income as it represents the capital used up in the process of production.

f. Statistical discrepancy: No, this is not included in the national income as it is not a measure of economic activity.

g. Social Security contributions: No, these are not included in the national income as they are not payments for goods or services.

h. Interest: Yes, this is included in the national income as it is a payment for the use of resources.

i. Proprietors’ income: Yes, this is included in the national income as it is a payment for the use of resources.

j. Net exports: Yes, this is included in the national income as it represents the value of a country's exports minus its imports.

k. Dividends: Yes, this is included in the national income as it is a payment for the use of resources.

l. Compensation of employees: Yes, this is included in the national income as it is a payment for labor services.

m. Taxes on production and imports: Yes, this is included in the national income as it is a payment for the use of resources.

n. Undistributed corporate profits: Yes, this is included in the national income as it is a payment for the use of resources.

o. Personal taxes: No, these are not included in the national income as they are not payments for goods or services.

p. Corporate income taxes: No, these are not included in the national income as they are not payments for goods or services.

q. Corporate profits: Yes, this is included in the national income as it is a payment for the use of resources.

r. Government purchases: Yes, this is included in the national income as it represents government consumption and investment spending.

s. Net private domestic investment: Yes, this is included in the national income as it represents the total investment in the economy by the private sector.

t. Personal saving: No, this is not included in the national income as it is not a measure of economic activity.

u. Gross private domestic investment: Yes, this is included in the national income as it represents the total investment in the economy by the private sector.

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