Question

The following table shows the national income data for an economy with a population of 75 million.

Wages
35,000

Public investment
32,500

Corporate investment
42,250

Net property income from abroad
-17,252

Government expenditure
15,275

Net export
-2,250

Depreciation
12,750

Subsidies
12,150

Taxes on expenditure
18,500

Private consumption
95,500

Calculate

1. a) Gross domestic product at market price                                                

     b) Gross national product at market price                                                                                                     

     c) Gross national product at factor cost                                                                                                 

     d) National income

Answer 1

Expenditure Method; GDP _MP= C+I+G+(X—M) Here; 1. GDP_MP= Private consumption +( public investment+ corporate investment) + government expenditure + net export ; or , GDP _MP= 95500+(32500+42250)+15275++(–2250) = 183275

2. GNP _MP= GDP_MP+ net property income from abroad) or, GNP _MP= 183275+(—17252)   = 166,023

(Difference between domestic income and national income is of net factors income from abroad)

3. GNP _FC = GNP_MP‐ ( indirect tax —subsidies) or GNP _FC= 166023 –( 18500—12150) = 166023—6350=159,673

( Difference between factor cost and market price is of net indirect taxes , I.e indirect taxes —subsidies)

4. National Income (NNP_FC)= GNP_FC— depreciation = 159673–12750= 146,923

(Difference between gross and net value of a parameter is of ' depreciation ')