The following macroeconomic data (in billions of Naira) were released for the Republic of … — JAMB UTME

The following macroeconomic data (in billions of Naira) were released for the Republic of Veridia for a given fiscal year:

- Personal Consumption Expenditure ( $C$ ): $\text{₦}520\text{ billion}$
- Gross Domestic Fixed Capital Formation: $\text{₦}180\text{ billion}$
- Value of Physical Change in Stocks: $\text{₦}25\text{ billion}$
- Government Final Consumption Expenditure ( $G$ ): $\text{₦}210\text{ billion}$
- Exports ( $X$ ): $\text{₦}95\text{ billion}$
- Imports ( $M$ ): $\text{₦}115\text{ billion}$
- Net Factor Income from Abroad: $\text{₦}35\text{ billion}$

Using the expenditure method of national income measurement, what is the value of the Gross National Product (GNP) at market prices in billions of Naira?

Answer: 950 billion Naira

Answer

The Gross National Product (GNP) at market prices is 950 billion Naira.

The expenditure method aggregates expenditure components as follows: Personal Consumption (

C = 520

), Gross Investment (

I = 180 + 25 = 205

), Government Expenditure (

G = 210

), and Net Exports (

X - M = 95 - 115 = -20

). Summing these gives GDP =

520 + 205 + 210 - 20 = 915\text{ billion Naira}

. Adding Net Factor Income from Abroad (

35\text{ billion Naira}

) yields GNP =

915 + 35 = 950\text{ billion Naira}

Step-by-Step Solution

Calculate total Gross Investment (I)

Gross Investment = 180 + 25 = 205 billion Naira

Total investment expenditure includes both fixed capital formation and the physical change in inventory/stocks.

Calculate Net Exports (X - M)

Net Exports = 95 - 115 = -20 billion Naira

Net exports represent expenditure by foreigners on domestic goods minus domestic expenditure on foreign goods.

Calculate Gross Domestic Product (GDP)

GDP = 520 + 205 + 210 + (-20) = 915 billion Naira

Under the expenditure approach, GDP = C + I + G + (X - M).

Calculate Gross National Product (GNP)

GNP = GDP + Net Factor Income from Abroad = 915 + 35 = 950 billion Naira

GNP accounts for income earned by domestic factors of production abroad minus income earned by foreign factors of production domestically.

Key Concept

Expenditure Method of Measuring National Income and GNP Calculation

Estimated Time:1m 30s

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