Answer to Question #295847 in Microeconomics for juju

Question

gross national product birr 5000, indirect taxes birr 580, net domestic product birr 5900, net national product birr 4250 the a) calculate gross domestic product b) net national income at factor cost c) calculate net factor income

Answer 1

Qn. A

To calculate the value of GDP, we know the following;

$NNP=4250$

$GNP=5000$

$NDP=5900$

$NNP=GNP-depreciation$

$4250=5000-depreciation$

$depreciation=5000-4250=750$

$NDP=GDP-depreciation$

$5900=GDP-750$

therefore;

$GDP=5900+750$

$\bold{GDP=6650}$

Qn. B

Net national income at factor is given as;

$NNI=GDP+NX-depreciation$

$NNI=6650+NX-750$

$NNI=5900+NX$

$NX =net\ factor\ income$

but we know;

$GNP=GDP+NX$

$5000=6650+NX$

$NX=-1650$

$NNI=5900+(-1650)$

$\bold{NNI=4250}$

Qn. C

Net factor income $=NX$

from our calculations above, $NX=-1650$

$\therefore \bold{Net\ factor\ income =-1650}$