GDP to PI. GDP=C + Ig + G + Xn  C is usually 67-70% of GDP  Xn is usually a negative number  C is the key to growth.

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Presentation transcript:

GDP to PI

GDP=C + Ig + G + Xn  C is usually 67-70% of GDP  Xn is usually a negative number  C is the key to growth

Going from GDP to PI numbers:  GDP minus Consumption of Fixed Capital (CFC or Depreciation) will equal:  NDP (Net Domestic Product)  NDP minus Indirect Business Taxes, minus “Net Foreign Factor Income” (if this is a negative number) will equal:  NI (National Income)

 NI minus social Security contributions (Payments), minus Corporate Income Taxes, minus “Undistributed Corporate Profits”, plus transfer payments received by citizens will equal:  PI (Personal Income)  PI minus Personal Taxes Paid equals:

 DI (Disposable Income)  DI minus Savings equals  C (Consumption)

Notes :  Indirect Business Taxes: Sales Taxes Excise Taxes Licenses

 Net Foreign Factor Income: Money US citizens earn overseas and send back to the US versus money foreigners earn here and send back to their home countries (remittances)

 Undistributed corporate profits: Total corporate profits minus corporate taxes paid and minus any money paid to stockholders in the form of dividend payments

 Transfer Payments: Social Security Payments, Unemployment compensation payments, welfare payments, disability payments

 Where do credit card expenditures and payments fit in?????