Question

1. The table below shows the various items produced and their values in a hypothetical economy within a particular year. Use the information to answer the following questions:

ITEM	VALUE (million GHc)
Sugar cane	200
Tie-and-dye	400
Flour	950
Palm Fruit	1000
Furniture	500
Palm Kernel	2500
Wheat	150
“Friday Dress”	700
Bread	2100
Kernel oil	2800
Subsidy	250
Depreciation	300
Taxes	480
Net Factor Income                     from Abroad   (NFIA)	-500

Using the Value Added approach, Compute:

i) Gross Domestic Product (GDP) at factor price.         (3marks)      

ii) Gross National Product (GNP) at market price.       

iii) Net National Product at factor price.                       

iv) Why is the Net Factor Income from Abroad (NFIA) negative? Suggest ways to address the occurrence.                                                                                   

Answer 1

Answes

1,GDPmp= (value of output in primary Sector-intermediate consumption)+ (value of output in secondary Sector - intermediate consumption) + value of output in tertiary sector - intermediate consumption)

=6300

GDPfc=GDPmp-taxes

=6300-480

=5820

2,GNPmp= value of all final goods and services produced in the economy + net factor income from abroad

=6300-500

5800

3,NNPfc=GNPfc-Depreciation

GNPfc =GNPmp-tax+subsidies

=5800-480+250

=5570

So,NNPfc=5570-300

=5270

4,◆ Net factor income from abroad is negative when income earned by foreigners from our country is more than the income earned by us from abroad.

◆ Through investing in foreign Nation in the companies, properties etc