Part 1. (textbook p. 345...)

For #1-9, state which letter of the GDP formula [C+I+G+(X-M)] would be affected (#1 is done as an example):

1. people buying PCs (this would affect the "C", consumer sector)
2. shipping steel overseas
3. buying oil from the Middle East
4. the government building roads
5. a company building a warehouse
6. a presidential candidate promising he'd increase spending on nuclear power plants
7. a company updates its computer system
8. people buying Christmas presents
9. people buying trinkets from China
10. To calculate PI, is each item below ADDED to or SUBTRACTED from NI? Remember, money to YOU, add it. Money away from YOU, subtract it.
1. Social Security received
2. Profits reinvested
3. Medicaid
4. Unemployment compensation
5. Social Security contributions by employer
6. Corporate taxes
11. If you know PI, how do you get DI?

Part 2. Draw and complete the following chart:

Key to abbreviations:

The first 10 initials you should be able to figure out from your notes.

D = depreciation

IBT = Indirect business taxes

N = the sum total of corporate taxes, profits reinvested, employer Social Security contributions

TP = transfer payments

PT = personal taxes