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Calculate GNP and GDP per capita for both years, showing all workings.

Economics

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4 parts
a

K17.5 billion\text{K17.5 billion}

K21.5 billion\text{K21.5 billion}

b

K2,000\text{K2,000}

K2,315.79\text{K2,315.79}

c

K1,944.44\text{K1,944.44}

K2,263.16\text{K2,263.16}

d

economic growth\text{economic growth}

Step-by-step solution

5 steps

Here's the national income and economic growth analysis:

Part a· 2 steps

Calculate GNP for BOTH years

  1. Calculate Net Factor Income from Abroad (NFIA) for each year.

    NFIA=Overseas income earned by PNG residents−Income earned in PNG by foreigners\text{NFIA} = \text{Overseas income earned by PNG residents} - \text{Income earned in PNG by foreigners}

    For Year 1:

    NFIAYear 1=K1.5 billion−K2 billion=-K0.5 billion\text{NFIA}_{\text{Year 1}} = \text{K1.5 billion} - \text{K2 billion} = \text{-K0.5 billion}

    For Year 2:

    NFIAYear 2=K2 billion−K2.5 billion=-K0.5 billion\text{NFIA}_{\text{Year 2}} = \text{K2 billion} - \text{K2.5 billion} = \text{-K0.5 billion}
  2. Calculate GNP for each year.

    GNP=GDP+NFIA\text{GNP} = \text{GDP} + \text{NFIA}

    For Year 1:

    GNPYear 1=K18 billion+(-K0.5 billion)=K17.5 billion\text{GNP}_{\text{Year 1}} = \text{K18 billion} + (\text{-K0.5 billion}) = \text{K17.5 billion}

    For Year 2:

    GNPYear 2=K22 billion+(-K0.5 billion)=K21.5 billion\text{GNP}_{\text{Year 2}} = \text{K22 billion} + (\text{-K0.5 billion}) = \text{K21.5 billion}

    The GNP for both years are:

    • Year 1: K17.5 billion\boxed{\text{K17.5 billion}}
    • Year 2: K21.5 billion\boxed{\text{K21.5 billion}}

Part b

K2,000\text{K2,000}

Calculate GDP per capita for BOTH years

  1. Calculate GDP per capita for each year.

    GDP per capita=GDPPopulation\text{GDP per capita} = \frac{\text{GDP}}{\text{Population}}

    For Year 1:

    GDP per capitaYear 1=K18,000,000,0009,000,000=K2,000\text{GDP per capita}_{\text{Year 1}} = \frac{\text{K18,000,000,000}}{9,000,000} = \text{K2,000}

    For Year 2:

    GDP per capitaYear 2=K22,000,000,0009,500,000≈K2,315.79\text{GDP per capita}_{\text{Year 2}} = \frac{\text{K22,000,000,000}}{9,500,000} \approx \text{K2,315.79}

    The GDP per capita for both years are:

    • Year 1: K2,000\boxed{\text{K2,000}}
    • Year 2: K2,315.79\boxed{\text{K2,315.79}}

Part c

K1,944.44\text{K1,944.44}

Calculate GNP per capita for BOTH years

  1. Calculate GNP per capita for each year.

    GNP per capita=GNPPopulation\text{GNP per capita} = \frac{\text{GNP}}{\text{Population}}

    For Year 1:

    GNP per capitaYear 1=K17,500,000,0009,000,000≈K1,944.44\text{GNP per capita}_{\text{Year 1}} = \frac{\text{K17,500,000,000}}{9,000,000} \approx \text{K1,944.44}

    For Year 2:

    GNP per capitaYear 2=K21,500,000,0009,500,000≈K2,263.16\text{GNP per capita}_{\text{Year 2}} = \frac{\text{K21,500,000,000}}{9,500,000} \approx \text{K2,263.16}

    The GNP per capita for both years are:

    • Year 1: K1,944.44\boxed{\text{K1,944.44}}
    • Year 2: K2,263.16\boxed{\text{K2,263.16}}

Part d

economic growth\text{economic growth}

Has PNG achieved economic growth between Year 1 and Year 2? Justify your answer using your calculated figures

  1. Compare GDP and GNP figures between Year 1 and Year 2.

    • GDP increased from K18 billion (Year 1) to K22 billion (Year 2).
    • GNP increased from K17.5 billion (Year 1) to K21.5 billion (Year 2).
    • GDP per capita increased from K2,000 (Year 1) to K2,315.79 (Year 2).
    • GNP per capita increased from K1,944.44 (Year 1) to K2,263.16 (Year 2).

    Yes, PNG has achieved economic growth\boxed{\text{economic growth}}. This is justified by the increase in both its total GDP and GNP, as well as its GDP per capita and GNP per capita, from Year 1 to Year 2. All key indicators of economic output and average individual income show an upward trend.

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