Question

National Income

• The following are some of the national income accounts for the country of Ocean:

  Name of accounts	Amount (in billion $)
  Government purchases of goods and services	1721.6
  Exports	1096.3
  Receipts of factor income from the rest of the world	382.7
  Depreciation	990.8
  Net fixed investment	6882
  Consumption expenditures	6739.4
  Indirect business taxes	664.6
  Imports	1475.8
  Net interests	0
  Payments of factor income to the rest of the world	343.7
  Inventory changes	56.5
  Social security contributions	702.7
  Dividends	702.7
  Government transfer payments	1366.3
  Personal taxes	1235.7
  Net Personal interest income	0
  Corporate profit	1098.2

  Using the above information, calculate:

• Gross domestic product (GDP)

• Gross national income (GNI)
• Net national income (NNI)
• National income (NI)

Answer 1

• Gross Domestic Product is calculated by the following formula :

GDP = Consumption + Investment + Government expenditure + Export - Import

• Gross National Income is calculated as follows :

GNI = GDP + Net income from abroad

• Net National Income is measured as follows :

NNI = GNI - Depreciation

• National Income can be calculated as follows:

NI = NDP = GDP - Depreciation

Following the above formulae, we can calculate them using the given values:

GDP = Consumption + Investment + Government expenditure + Export - Import
= 6739.4 + 6882 + 1721.6 + 1093.3 - 1475.8
= 14960.5
GDP = 14,960.5

GNI = GDP + Net income from abroad
= 14960.5 + (Receipts from abroad - Payment to abroad)
= 14960.5 + (382.7 - 343.7)
= 14960.5 + 39
= 14999.5
GNI = 14,999.5

NNI = GNI - Depreciation
= 14999.5 - 990.8
= 14008.7
NNI = 14,008.7

NI = NDP = GDP - Depreciation
= 14960.5 - 990.8
= 13969.7
NI = 13,969.7

ANSWERS:

• GDP = 14,960.5
• GNI = 14,999.5
• NNI = 14,008.7
• NI = 13,969.7