The following macroeconomic national income data are provided for a country in a given financial year (in millions of Naira): | Macroeconomic Component | Amount (\text{N} millions) | |---|---| | Personal consumption expenditure (C) | 540 | | Gross private domestic investment (I) | 185 | | Government

The following macroeconomic national income data are provided for a country in a given fin… — JAMB UTME

The following macroeconomic national income data are provided for a country in a given financial year (in millions of Naira):

Macroeconomic Component	Amount ( $\text{N}$ millions)
Personal consumption expenditure ( $C$ )	$540$
Gross private domestic investment ( $I$ )	$185$
Government final expenditure ( $G$ )	$210$
Exports ( $X$ )	$130$
Imports ( $M$ )	$155$
Net factor income from abroad ( $NFIA$ )	$-30$
Consumption of fixed capital	$45$
Indirect taxes	$65$
Subsidies	$20$

Using the expenditure approach, calculate the Net National Product at factor cost ( $NNP_{fc}$ ) in millions of Naira.

Answer: 790 million Naira

The Net National Product at factor cost (

NNP_{fc}

) is 790 million Naira.

To calculate Net National Product at factor cost (

NNP_{fc}

) via the expenditure method: First, calculate Gross Domestic Product at market prices (

GDP_{mp} = C + I + G + X - M = 540 + 185 + 210 + 130 - 155 = 910

). Next, add Net Factor Income from Abroad (

NFIA

) to obtain Gross National Product at market prices (

GNP_{mp} = 910 - 30 = 880

). Then, deduct depreciation to obtain Net National Product at market prices (

NNP_{mp} = 880 - 45 = 835

). Finally, adjust for indirect taxes and subsidies (

NNP_{fc} = 835 - 65 + 20 = 790

million Naira).

Calculate Gross Domestic Product at market prices (

GDP_{mp}

)

GDP_{mp} = 540 + 185 + 210 + (130 - 155) = 910

million Naira

Apply the basic expenditure identity

GDP = C + I + G + (X - M)

Calculate Gross National Product at market prices (

GNP_{mp}

)

GNP_{mp} = 910 + (-30) = 880

million Naira

Add Net Factor Income from Abroad (

NFIA

) to

GDP_{mp}

Calculate Net National Product at market prices (

NNP_{mp}

)

NNP_{mp} = 880 - 45 = 835

million Naira

Subtract capital consumption allowance (depreciation) from

GNP_{mp}

Adjust

NNP_{mp}

for net indirect taxes to arrive at

NNP_{fc}

NNP_{fc} = 835 - 65 + 20 = 790

million Naira

Subtract indirect taxes and add subsidies to convert market price valuation into factor cost valuation.

Calculation of Net National Product at factor cost (

NNP_{fc}

) from macroeconomic expenditure components.