Question

Suppose the following are national accounts data for a given year for a fictitious country:
$B AUD
Consumption of fixed capital ………………………………………………. 320
Gross private fixed capital formation……………………………………….. 785
Government consumption expenditure………………………………………. 585
Government investment expenditure………………………………………… 210
Imports of goods and services………………………………………………...565
Exports of goods and services………………………………………………...690
Household consumption expenditure………………………………………..3115
Net property and other income paid overseas………………………………….34
Returns to labour…………………………………………………………….2651
Firm profits………………………………………………………………….1687
Other factor rentals……………………………………………………………482
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(f) Calculate Gross National Product (GNP);
(g) Calculate Net National Product (NNP);
(h) Calculate Current Account Balance (CAB);
(i) Calculate Gross National Savings (GNS)

Answer 1

(f) The formula to calculate the components of GNP is Y = C + I + G + X + Z. where Y stands for GNP = Consumption + Investment + Government + X (net exports, or imports minus exports) + Z (net income earned by domestic residents from overseas investments - net income earned by foreign residents from domestic investments.)

C = Consumption of fixed capital+ Household consumption expenditure

C = 3435

I = 210

G = 585

X = 125

Z = - 34

GNP = 3435 + 210 + 585 + 125 -34 = 4321

(g) NNP = GNP - Depreciation

here we do not any depreciation given, so NNP is same as GNP.

(i) Current Account Balance = (X-M) + NI + NT

• X is the export of goods and M is the import of goods = 125
• NI is the net income = 34
• NT is the net current transfers

Current account Balance = 125 + 34 = 159

(j) GNS = Gross national disposable income - final consumption expenditure

National disposable income = National income (4321)+ Net indirect taxes(0) + Net current transfers from rest of the world(-34)

= 4321 - 34 = 4287

final consumption expenditure = Government consumption expenditure + Household consumption expenditure

= 3700

GNS = 4287 - 3700 = 587