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Difficulty: MediumBasic National Income Aggregates (GDP, GNP, NNP, NDP)

A nation's economic records for a given fiscal year provide the following national income figures:

- Gross Domestic Product (GDP\text{GDP}): N5,400 million\text{N}5,400\text{ million}
- Income earned by domestic citizens working abroad: N450 million\text{N}450\text{ million}
- Income earned by foreign nationals operating domestically: N600 million\text{N}600\text{ million}
- Capital Consumption Allowance (CCA\text{CCA}): N380 million\text{N}380\text{ million}

Calculate the Net National Product (NNP\text{NNP}) of the country in millions of Naira.

Answer: 4870 million

Answer

The Net National Product (NNP) of the country is N4,870 million.
Net National Product (NNP) is obtained by adding Net Factor Income from Abroad (NFIA) to Gross Domestic Product (GDP) to get Gross National Product (GNP), and then subtracting Capital Consumption Allowance (CCA). Here, NFIA = N450 million - N600 million = -N150 million. Thus, GNP = N5,400 million - N150 million = N5,250 million. Finally, NNP = N5,250 million - N380 million = N4,870 million.

Step-by-Step Solution

1
Calculate Net Factor Income from Abroad (NFIA)
NFIA = N450 million - N600 million = -N150 million
NFIA measures the net flow of factor payments between domestic citizens abroad and foreign residents domestically.
2
Calculate Gross National Product (GNP)
GNP = N5,400 million + (-N150 million) = N5,250 million
GNP adjusts GDP for net factor receipts from abroad.
3
Calculate Net National Product (NNP)
NNP = N5,250 million - N380 million = N4,870 million
NNP reflects the net output available to an economy after accounting for capital depreciation.

Key Concept

Basic National Income Aggregates (GDP, GNP, NNP, NDP)
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Topics

Basic National Income Aggregates (GDP, GNP, NNP, NDP)

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