Question

How is  GNI per person calculated?  What happens to GNI if the government decides to invest in innovation and entrepreneurship(25 points) ( write down the formula, explain the components, indicate the changes to each factor and the overall GDP)

Answer 1

--> GDP means total value of final goods and services produced in an economy within a year. It can be calculated by various methods such as income method,value added method and expenditure method.

--> Through an expenditure method, Total output Y = C + G + I + (X-M) wherein C is personal consumption expenditure, G is government consumption expenditure and gross investments and X is exports and M is Imports.

---> you will get GNI when you add net income from abroad to the GDP value. So GNI = GDP + net income from abroad.

---> you can calculate GNI per person by dividing it with total population. So GNI per person or per capita income = GNI/ population.

---> If government decides to invest in innovation and entrepreneurship, it comes under government capital expenditure. So if G value increases ,then total output value Y also increases.