Gross Domestic Production for 2006 is given below.
Compensation for employees = K2550.9 million
Private consumption = K7959.0 million
Fixed Capital Formation = K2652.6 million
Gross Operation surplus = K11994.5 million
Domestic Factor Incomes = K985.0 million
Government Consumption = K 2837.6 million
Net exports = K3447.3 million
Net factor income = K4325.5 million
Using the information provided above answer the following questions:
1. Calculate the Gross Domestic Product (GDP) using the expenditure method.
Expenditure method:
GDP = C+ I + G + (X-M)
2. Calculate Gross National Product (GNP)
1. Using the expenditure method:
GDP = Private consumption + Fixed Capital Formation + Government Consumption + (Net exports)
GDP = 7959.0 + 2652.6 + 2837.6 + 3447.3
GDP = 16896.5 million
Therefore, the Gross Domestic Product (GDP) using the expenditure method is K16896.5 million.
2. To calculate Gross National Product (GNP), we need to add Net factor income to GDP:
GNP = GDP + Net factor income
GNP = 16896.5 + 4325.5
GNP = 21222 million
Therefore, the Gross National Product (GNP) is K21222 million.
In the expenditure method;
GDP= C+I+G+(X-M)
C= consumption expenditure
I= Investment expenditure
G= Government expenditure
X= Export
M= import
Now calculate the GDP again.
Given:
Private consumption (C) = K7959.0 million
Fixed Capital Formation (I) = K2652.6 million
Government Consumption (G) = K2837.6 million
Net exports (X-M) = K3447.3 million
GDP = C + I + G + (X-M)
GDP = 7959.0 + 2652.6 + 2837.6 + 3447.3
GDP = 16896.5 million
Therefore, the GDP using the correct expenditure method calculation is K16896.5 million.
How did you find the C, I, G, X, and M in
GDP= C+I+G+(X-M)
Apologies for the confusion in my previous responses. Let's break down the components of GDP using the correct variables:
Given:
Private consumption (C) = K7959.0 million
Fixed Capital Formation (I) = K2652.6 million
Government Consumption (G) = K2837.6 million
Net exports (X) = K3447.3 million
Imports (M) = ?
To calculate GDP using the expenditure method formula (GDP = C + I + G + (X - M)), we need to find the value of Imports (M) first.
From the information provided:
Net exports (X) = Exports - Imports
Therefore,
Imports (M) = Exports - Net exports
Imports (M) = Exports - 3447.3
Now that we have the value of Imports (M) as Exports - 3447.3, we can calculate GDP:
GDP = Private consumption (C) + Fixed Capital Formation (I) + Government Consumption (G) + (Exports - Imports)
GDP = 7959.0 + 2652.6 + 2837.6 + (Exports - (Exports - 3447.3))
GDP = 7959.0 + 2652.6 + 2837.6 + 3447.3
Therefore, the correct GDP calculation using the expenditure method is:
GDP = K16896.5 million
I hope this clears up any confusion. Thank you for your patience.