Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 6PA
(a)
To determine
The contribution to
(b)
To determine
The contribution to NNP.
(c)
To determine
The contribution to
(d)
To determine
The contribution to compensation of employees.
(e)
To determine
The contribution to proprietor’s income.
(f)
To determine
The contribution to corporate profit.
(g)
To determine
The calculation of personal income.
(h)
To determine
The disposable personal income.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
1. Tina is the sole owner of Tina's Lawn Mowing, Incorporated (TLM).
In one year, TLM collects $1,000,000 from customers to mow their lawns. TLM's consumption of fixed capital (depreciation)
is $125,000. TLM pays $600,000 to its workers, who pay $140.000 in taxes on this income. TLM pays $50,000 in corporate
income taxes and pays Tina a dividend of $150,000. Tina pays taxes of $60,000 on this dividend income. TLM retains
$75,000 of earnings in the business to finance future expansion.
How much does this economic activity contribute to each of the following?
a. GDP b. NDP c. National income d. Compensation of employees e. Proprietors' income f. Corporate profits g. Personal
income h. Disposable personal income
4) Mitsven Surfboard Inc. is a company in San Diego that shapes and sells surfboards. In 2018 their accounts were as
follows: total revenues $150,000; cost of inputs $75,000; wages paid to employees $35,000; profits to owner
$25,000, taxes paid by company $5,000. The building and the equipment used for production are property of the
company, and no new building or new equipment was purchased in 2018. The value added produced by Mitsven
Surfboard Inc. in 2018 was
A. $150,000
B. $75,000
C. $65,000
D. $10,000
Answer:
5) Consider the accounts of Mitsven Surfboard Inc. described in question 4). Applying the income approach to GDP
that we have studied in class, the depreciation (or consumption) of fixed capital for the company in 2018 was
A. Zero.
B. $10,000
C. $65,000.
D. $75,000
Answer:
Exercise 4 (Basic Net Present Value Analysis)
On January 2, Pebbles Cruz paid P18,000 for 900 ordinary shares of Rainbow
Company. Ms. Cruz received an P0.80 per share dividend on the shares at the
end of each year for four years. At the end of four years, she sold the share for
P22,500. Ms. Cruz has a goal of earning a minimum return of 12% on all of
her investments.
Required:
(Ignore income taxes.) Did Ms. Cruz earn a 12% return on the share? Use he
net present value method and the general format. Round all computations t
the nearest whole peso.
Knowledge Booster
Similar questions
- Economy 1. Pamela worked as an auditor earning $60,000 per annum. She decided to open her own consultancy business. For her business, she rents an office where she pays $2,000 per annum. Further, her utility expenses are $300 per annum and she hired a part-time secretary to whom she pays $25,000 per annum. To start her business, she borrowed $40,000 from her savings, where she was earning an interest of $500 per annum. In her first year, her business earned a revenue of $300,000. Based on this information, calculate the following: a. Total implicit costs per annum b.Total explicit costs per annum c.Total accounting costs and accounting profit for that year d.Total economic costs and economic profit for that yeararrow_forward2) Which of the following statements regarding net income transferred to retained earnings is correct? A) Net income net income transferred to retained earnings - dividends B) Net income transferred to retain earnings = net income + dividends C) Net income = net income transferred to retain earnings + dividendsarrow_forwardMichael is an Internet service provider. On December 31, 2009, he bought an existing business with servers and a building worth $400,000. During his first year of operation, his business grew and he bought new servers for $500,000. The market value of some of his older servers fell by $100,000. What was Michael’s: (i) gross investment during 2010 (ii) depreciation during 2010 (iii) net investment during 2010 (iv) capital at the end of 2010arrow_forward
- Using the following information, what is the amount of gross profit? $33,779 6,886 576 551 Purchases Merchandise inventory, September 1 Administrative expenses Rent revenue Oa. $86,957 Ob. $24,048 Oc. $55,982 Od. $25,007 Selling expenses Merchandise inventory, September 30 Sales Interest expensearrow_forwardSean lives in San Diego and runs a business that sells pianos. In an average year, he receives $724,000 in revenue from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $424,000; he also pays wages and utility bills totaling $266,000. He owns his showroom; if he chooses to rent it out, he will receive $4,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Sean does not operate this piano business, he can work as a paralegal and receive an annual salary of $21,000 with no additional monetary costs. No other costs are incurred in running this piano business. Identify each of Sean's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The wages and utility bills that Sean pays The rental income Sean could receive if he chose to rent out his showroom The salary Sean could earn if he worked as a paralegal The wholesale cost for the…arrow_forwardJane quit her job at IBM where she earned $50,000 a year. She cashed in $50,000 in corporate bonds that earned 10% interest annually to buy a mini-bus. Jane has decided to buy the mini-bus and set up a commuter service between Lincoln and Omaha. There are 1000 people who will pay $400 a year each for the commuter service; $280 from each person goes for gas, maintenance, insurance, depreciation, etc. What are Jane's total revenue? A. $600,000 B. $250,000 C. $400,000 D. $480arrow_forward
- Harvey quit his job at State University, where he earned $62,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $4,000 a year. To start the business, he cashed in $50,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 10,000 units of software at $72 for each unit. Of the $72 per unit, $60 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. The economic profits of Harvey's firm in the first year werearrow_forwardMichael is an Internet service provider. On December 31, 2013, he bought an existing business with servers and a building worth $300,000. During 2014, he bought new servers for $400,000. The market value of his older servers fell by $100,000. Michael's gross investment during 2014 was $2 Michael's depreciation during 2014 was $2. Michael's net investment during 2014 was $2. Michael's capital at the end of 2014 was $2.arrow_forwardDuring a year of operation, a firm collects $450,000 in revenue and spends $100,000 on labor expense, raw materials, rent and utilities. The firm’s owner has provided $750,000 of her own money instead of investing the money and earning a 10 percent annual rate of return. Question: Higher personal taxes in the U.S. will affect personal disposable income which in turn will affect the domestic demand for goods and services. Costs of production and inputs however continue declining. What do you expect the U.S. output and prices in the near future. Assume we are moving from the old equilibrium to a new equilibrium. Please state clearly your assumptions and include a graph to support your answer.arrow_forward
- 4.11 Lantau Beer (A): European Sales. Lantau Beer is a Hong Kong-based brewery and files all of its financial statements in Hong Kong dollars (HK$). The company's European sales director, Phillipp Bosse, has been criticized for his performance. He disagrees, arguing that sales in Europe have grown steadily in recent years. Who is correct? 2010 2011 2012 Total net sales, HK$ 171,275 187,500 244,900 Percent of total sales from Europe 48% 44% 39% Total European sales, HK$ Average exchange rate, HK$/€ 11.5 11.7 10.3 Total European sales, euros Growth rate of European salesarrow_forwardAssume that you are employed by the government of Tanzania in 1964, a new nation recently independent from Britain. The Tanzanian parliament has decided that it will spend 10 million shillings on schools, roads, and healthcare for the year. You estimate that the net taxes for the year are eight million shillings. The difference will be financed by selling 10-year government bonds at 12% interest per year. The interest on outstanding bonds must be added to government expenditure each year. Assume that additional taxes are added to finance this increase in government expenditure so the gap between government spending is always two million. If the school, road, and healthcare budget are unchanged, compute the value of the accumulated debt in 10 years.arrow_forwardImagine Tom's annual salary as an assistant store manager is $30,000, he owns a building that rents for $10,000 yearly, and his financial assets generate $1,000 per year in interest. One day, after deciding to be his own boss, he quits his job, evicts his tenants, and uses his financial assets to establish a bicycle repair shop. To run the business, he outlays $15,000 in cash to cover all the costs involved with running the business, and earns revenues of $50,000. Which of the following statements is true? Tom earns an accounting profit of $35,000. Tom has an opportunity cost of $41,000. All of these are true. Tom experiences an economic loss of $6000.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning