In an economy, output is measured by the following Indicators :Compensation of employee.Income received from the rest of the world
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Compensation of employees. 200
Worm-out capital 90
Income received from the rest of the world 120
Net property income from abroad 400
Gross trading profit of public corporations 180
Mixed incomes 220
Net indirect taxes 110
Income paid to the rest of the world 280
Income accruing to property owners 150
Dividends paid by listed companies to
shareholders 200
Profits of private companies 350
Unproductive incomes 50
Stock appreciation 10
SOLUTIONS
To compute the values requested, we'll first understand the components and the terminologies.
GDP (Gross Domestic Product) refers to the value of all goods and services produced within a country's borders in a specific period.
NDP (Net Domestic Product) is the GDP adjusted (subtract DEPRECIATION) for depreciation (worn-out capital) - represents the value of the net increase in the capital stock within a specific period.
NNP (Net National Product) is the GDP adjusted for net factor income from abroad and depreciation. It is the value of the goods and services produced in a country over a specific period, including any income generated from abroad but excluding depreciation.
1).GDP at market price = Compensation of employees + Gross trading profit of public corporations + Mixed incomes + Dividends paid by listed companies to
shareholders + Income accruing to property owners + Profits of private companies + Indirect taxes - Stock appreciation
GDP at market price = 200 + 180 + 220 +200 + 150 + 350 +110 - 10
GDP at market price = 1400
2) NDP at factor cost:
To calculate NDP at factor cost, we need to remove depreciation (worn-out capital) from GDP and remove indirect taxes.
NDP at factor cost = GDP at market price - Depreciation - Net indirect taxes
NDP at factor cost = 1400 - 90 - 110
NDP at factor cost = 1200
3) NNP at market price:
To calculate NNP at market price, we need to adjust GDP for income received from and paid to the rest of the world and depreciation.
NNP at market price = (GDP at market price - Depreciation) to get (NDP at market price) + Net property income from abroad
NNP at market price =( 1400 -90) +400
NNP at market price = 1710
4) Under what circumstance will GDP be equal to GNP:
GDP (Gross Domestic Product) will be equal to GNP (Gross National Product) when the net income received from abroad is zero. In other words, income received from the rest of the world must be equal to income paid to the rest of the world.
In this case:
Net property income from abroad= 400
So, the net income from abroad is not zero, and therefore GDP does not equal GNP in this circumstance. GDP will equate to GNP when Net property income from Abroad is zero
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