Question

. Given the following National Income data, Compute

a) GNP b) NNP c) National Income. Hint: use income method here.

N'billion

Income from employment 162.4

Indirect business taxes 14.5

Gross capital formation (investment) 63.2

Transfer payments 11.0

Government final consumption expenditure 58.7

Export of goods and service 15.0

Private consumption expenditure 186.1

Subsidies 12.4

Personal taxes 38.5

Import of goods and services 17.2

Consumption of fixed capital 10.5

Net factor income from abroad 1.3

Answer 1

I don't think this question can be solved using the Income method since every componenet of that method is missing except compensation of employees in the form of Income from employment. Therefore, I have tried solving this using the Expenditure method. Also, since nothing is given regarding whether the GNP and NNP are to be calculated at market price or factor cost, I have done both. I hope it helps. Please don't forget to upvote.

(a) According to expenditure method,

GDPMP= Private final consumption expenditure + Govt final consumption expenditure + (Gross fixed capital formation

+Inventory investment) + Net exports

= 186.1 + 58.7 + (0+63.2) + (15-17.2) {Net exports = exports - imports and gross capital formation is given only for inventory investment}

= 305.8 billion

GNPMP= GDPMP + Net factor Income from abroad = 305.8 + 1.3 = 307.1 billion

GNPFC= GNPMP - Net Indirect taxes = 307.1 + (Indirect taxes - subsidies ) = 307.1 - (14.5 - 12.4 ) = 305 billion

(b) NNPMP= GNPMP - Consumption of fixed capital/Depreciation = 307.1 - 10.5 = 296.6 billion

NNPFC= GNPFC - Consumption of fixed capital/Depreciation = 305 - 10.5 = 294.5 billion

(c) National Income = NNPFC= 294.5 billion