Answer to Question #82744 in Macroeconomics for Abdul

Question

What is the difference between gross domestic (GDP) and gross national product (GNP) and which is likely to be lower in developing countries? Why? (4 Marks)

c) The following data relates to the market value of economic transactions for the three main sectors of your country’s economy.

SECTOR
VALUE OF OUTPUT
PURCHASES FROM OTHER FIRMS
Agriculture
300
160
Manufacturing
200
150
Services
150
120

Required:

(i) Compute the gross domestic product (GDP) and explain the method used and why. (2 Marks)

(ii) Given that: depreciation = 90, indirect taxes = 70, subsidies = 30, payments to factors of production from abroad = 20, payments to foreign factors = 40.

Compute:

1) Gross national product (GNP) at market prices. (1 Mark)

2) Net national product (NNP) at market prices. (1 Mark)

3) Net national product (NNP) at factor cost. (1 Mark)

4) Net domestic product (NDP) at factor cost (1 Mark)

Answer 1

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