Answer to Question #169882 in Economics for Kevin Daniels

Question

The national accounts of a country contain the following information: GDP $50,000 million, Depreciation $5,000 million, Net property income from $2,000 million.

What is the GNP?

What is the National Income?

Answer 1

(a) Gross National Product can be calculated as follows:

$$GNP=GDP+net\ property\ income,$$ $$GNP=\$50000 +\$2000=\$52000.$$

Therefore, GNP equals $52000 million.

(b) By the definition, NI includes payments to individuals (income from wages and salaries, and other income), plus payments to government (taxes), plus retained income from the corporate sector (depreciation, undistributed profits), less adjustments (subsidies, government and consumer interest, and statistical discrepancy). We have information only about retained income from the corporate sector (depreciation). Therefore, the NI equals $5,000 million.