1 National Income Accounts Chapter 22 Appendix © 2006 Thomson/South-Western

2 National Income  Captures all income earned by American- owned resources, whether located in the United States or abroad  Results from several adjustments to net domestic product  Adds net earnings from American resources abroad  Subtracts indirect business taxes, net of subsidies

3 Exhibit 6: Deriving Net Domestic Product and National Income (in trillions of dollars)

4 Personal Income  Personal income adds to national income the income received but not earned, and subtracts the income earned but not received  Income earned but not received in the current period includes  The employer’s share of Social Security taxes  Corporate income taxes  Undistributed corporate profits  Income received but not earned in the current period includes  Government transfer payments  Receipts from private pension plans  Interest paid by government and by consumers

5 Exhibit 7: Deriving Personal Income and Disposable Income (in trillions of dollars)

6 Disposable Income  Subtracting personal taxes and other government charges from personal income yields disposable income  Disposable income is the amount available for spending or saving  Take-home pay

7 Exhibit 8: Expenditure and Income Statement for the U.S. Economy (trillions of dollars)