Question

From Gross Domestic Product (GDP), we subtract the depreciation on domestic capital
stock, regardless who owns the capital.
$183 million – $7.2 million – $0.3 million = $175.50
Depreciation on Domestic Capital Stock Owned by Citizens 7.2
epreciation on Domest c Capi al S ock O ned by Foreigners 0.3
epreciat on on Foreign Capital Stock Owned by Citizens 0.8
The depreciation on foreign capital stock is not relevant.
Take heed: An exam problem may give a single depreciation figure. Unless the exam
problem specifies the capital base, the depreciation may be applied with no adjustment.

Question 1.4: GNP
What is Gross National Product (GNP) in 20X8?

Answer 1

The Gross Domestic Product (GDP) is $183 million

It shall be noted that relevant information regarding the "Net Factor Income of Americans from abroad" required for the estimation of Gross National Product (GNP) in 20X8 is not provided.

This information is:

Wages Paid to Foreigners Working in U.S. = $ 15.5 million

Wages Paid to Americans Working Abroad = $ 6.5 million

Profits Earned by U.S. Nationals on Foreign Assets = $ 4.5 million

Profit Earned by Foreigners on U.S. Assets = $ 2.5 million

Thus,

Gross National Product (GNP) in 20X8 = Gross Domestic Product + Net Factor Income from abroad

Gross National Product (GNP) in 20X8 = Gross Domestic Product - Wages Paid to Foreigners Working in U.S. + Wages Paid to Americans Working Abroad + Profits Earned by U.S. Nationals on Foreign Assets - Profit Earned by Foreigners on U.S. Assets

Hence, the Gross National Product (GNP) in 20X8 = $ (183 - 15.5 + 6.5 + 4.5 - 2.5 ) million = $ 176 million

Hence, the correct answer is $176 million