This economics question tests your understanding of economic models and analysis. The step-by-step answer below applies the relevant framework and explains the reasoning.
ScanSolve AI Answer
Here's the national income and economic growth analysis: a) Calculate GNP for BOTH years: Step 1: Calculate Net Factor Income from Abroad (NFIA) for each year. NFIA = Overseas income earned by PNG residents - Income earned in PNG by foreigners For Year 1: NFIA_Year 1 = K1.5 billion - K2 billion = -K0.5 billion For Year 2: NFIA_Year 2 = K2 billion - K2.5 billion = -K0.5 billion Step 2: Calculate GNP for each year. GNP = GDP + NFIA For Year 1: GNP_Year 1 = K18 billion + (-K0.5 billion) = K17.5 billion For Year 2: GNP_Year 2 = K22 billion + (-K0.5 billion) = K21.5 billion The GNP for both years are: Year 1: K17.5 billion* Year 2: K21.5 billion* b) Calculate GDP per capita for BOTH years: Step 3: Calculate GDP per capita for each year. GDP per capita = GDPPopulation For Year 1: GDP per capita_Year 1 = K18,000,000,0009,000,000 = K2,000 For Year 2: GDP per capita_Year 2 = K22,000,000,0009,500,000 ≈ K2,315.79 The GDP per capita for both years are: Year 1: K2,000* Year 2: K2,315.79* c) Calculate GNP per capita for BOTH years: Step 4: Calculate GNP per capita for each year. GNP per capita = GNPPopulation For Year 1: GNP per capita_Year 1 = K17,500,000,0009,000,000 ≈ K1,944.44 For Year 2: GNP per capita_Year 2 = K21,500,000,0009,500,000 ≈ K2,263.16 The GNP per capita for both years are: Year 1: K1,944.44* Year 2: K2,263.16* d) Has PNG achieved economic growth between Year 1 and Year 2? Justify your answer using your calculated figures: Step 5: 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. 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. 3 done, 2 left today. You're making progress.