Calculate National Income Using Output/Product Approach or Method

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The Ghanaian economy over the accounting period generated the following output from the various sectors of the economy.                                                                                     

Agriculture.                                                       1500

Mining.    :                                                             400

Transport.   :                                                        350

Distributive trade. :                                            1000      

Manufacturing. :                                                1800

Construction. :                                                     400

Electricity, Gas and Water.   :                              400

Ownership of dwelling.  :                                     300

Banking, Insurance and Finance. :                      400    

Service. :                                                              200   

Public output (health, defence,           

education, etc.).:                                                   600

Intermediate product consumption. :               1000

Consumption of fixed capital.:                          1000

Subsidies.                                                             500

Indirect taxes.                                                      800

Net property income from abroad.                  -250

Compute For The Following

a. GDP at market price

b. Total gross output at market price

c. NDP at market priced

d. NNP at market price 

e. NNP at factor cost 

f. change GDP at market price to GNP at market price.

                                                              

Solution

 To compute the following, we will use the given data from specific sectors and follow the formulas:

a. GDP at market price = Total Gross Output(sum of outputs from each sector of production) - Intermediate Product Consumption 

 GDP at market price =( Agriculture + Mining + Transport + Distributive trade + Manufacturing + Construction + Electricity, Gas and Water + Ownership of dwelling + Banking, Insurance and Finance + Service + Public output )- Intermediate product consumption 

GDP at market price = (1500 + 400 + 350 + 1000 + 1800 + 400 + 400 + 300 + 400 + 200 + 600) - 1000 

GDP = 6350

b. Total gross output at market price = sum of outputs from each sector Or GDP + INTERMEDIATE PRODUCT 

Total gross output at market price = GDP+INTERMEDIATE GOODS = 6350+1000 =7350 OR sum of outputs from each sector :(1500 + 400 + 350 + 1000 + 1800 + 400 + 400 + 300 + 400 + 200 + 600)= 7350

Total gross output = 7350

c. NDP at market price = GDP at market price - Consumption of fixed capital( Depreciation)

NDP at market price = 6350 - 1000

NDP at market price = 5350

d. NNP at market price = NDP at market price + Net property income from abroad

NNP at market price = 5350 +( - 250)

NNP at market price = 5100

e. NNP at factor cost = NNP at market price - Indirect taxes + Subsidies

NNP at factor cost = 5100 - 800 + 500

NNP at factor cost = 4800

f. To change from GDP at market price to GNP at market price, we need to add net property income from abroad to GDP

GNP at market price = GDP at market price + Net property income from abroad

GNP = 6350 + (-250)

GNP at market price = 6100