Answer to Question #123827 in Macroeconomics for Siya

Question

Compensation=$329
Consumption=$370
Export=$55
Net foriegn factor income =$3
Government spending=$43
Gross investment=$43
Import=$63
Net interest=$49
Profit=$69
Rental income=$46
Calculate GDP and GNP with both approaches to national income accounting?

Answer 1

Expenditure Approach

The gross domestic product is computed using the following formula:

$\text{GDP=Consumption+Government spending+Investment+(Export - Imports)}$

$\text{GDP}=370+43+43+(55-63)$

$\text{GDP}=448$

The gross national product will therefore, be:

$\text{GNP=GDP+Net income from Broad}$

$\text{GNP}=448+3$

$\text{GNP}=451$

Income Approach.

Using Income approach the GNP is calculated as follows:

$\text{ GNP = Wages + Interest Income + Rental Income + Profit }$

$\text{GNP}=329+49+46+69$

$\text{GNP}=493$