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
a) Gross National Product (GNP) Step 1: Identify the components for the expenditure approach to GNP. The formula for GNP using the expenditure approach is: GNP = Private Consumption Expenditure (C) + Gross Capital Formation (I) + Government Final Consumption Expenditure (G) + (Exports (X) - Imports (M)) + Net Factor Income from Abroad (NFIA) From the given data: • Private consumption expenditure (C) = 186.1 • Gross capital formation (I) = 63.2 • Government final consumption expenditure (G) = 58.7 • Export of goods and services (X) = 15.0 • Import of goods and services (M) = 17.2 • Net factor income from Abroad (NFIA) = 1.3 Step 2: Substitute the values into the formula and calculate GNP. GNP = 186.1 + 63.2 + 58.7 + (15.0 - 17.2) + 1.3 GNP = 186.1 + 63.2 + 58.7 - 2.2 + 1.3 GNP = 307.1 The Gross National Product is 307.1. b) Net National Product (NNP) Step 1: Identify the components for NNP. The formula for NNP is: NNP = GNP - Consumption of Fixed Capital (Depreciation) From the given data: • GNP = 307.1 (calculated in part a) • Consumption of fixed capital (Depreciation) = 10.5 Step 2: Substitute the values into the formula and calculate NNP. NNP = 307.1 - 10.5 NNP = 296.6 The Net National Product is 296.6. c) National Income (NI) Step 1: Identify the components for National Income. The formula for National Income (at factor cost) from NNP (at market prices) is: National Income = NNP - Indirect Business Taxes + Subsidies From the given data: • NNP = 296.6 (calculated in part b) • Indirect business taxes = 14.5 • Subsidies = 12.4 Step 2: Substitute the values into the formula and calculate National Income. National Income = 296.6 - 14.5 + 12.4 National Income = 282.1 + 12.4 National Income = 294.5 The National Income is 294.5.