Page 219 - DECO405_MANAGERIAL_ECONOMICS

Managerial Economics

Notes (c) National income as commonly understood by every one refers to:
(i) GNP
(ii) NNP
(iii) GDP
(iv) NDP

2. State true or false for the following statements:
(a) NNP = C+G+X+M.
(b) Disposable income includes personal taxes.
(c) Value added = Total sales + total expenditure on raw materials and intermediate
products - closing stock of finished and semi-finished gods.
(d) GDP = GNP+ Net factor income from abroad.
(e) NNPMP = NNPFC+ Indirect taxes- Subsidies.
3. Fill in the blanks:

(a) The NNP is an .............. measure of the national income.
(b) Government expenditure is the sum of expenditure on consumption and ..............by
the government.

(c) NNP at factor cost is the sum of all the income payments received by ................. .
(d) Gross concept does not include............... .
(e) ................ is the total income that actually remains with individuals to dispose off as
they wish.

(f) Disposable income is allocated to .............. and ............. .
(g) Disposable income equals to income plus transfers less ........... .

13.6 Review Questions

1. Suppose that in the country of Nemania, the real gross national product in 1987 was £1483
billion (1972 equals 100). In 1988, real gross national product is £1510 billion (1972 equals
100). By how much the real gross national product would have grown in Nemania?
2. Why is there so much attention given to the national income figures of a country?
Newspapers report the figures, government officials talk about GDP growth, and even
secondary school textbooks mention them.
3. China has overtaken the UK to be the world's fourth largest economy. What this means is
that the GDP of China is larger than UK. But do the Chinese people have a higher standard
of living than the British or the French? Why/ why not?

4. Refer to the data ( in billion dollars) below and answer the questions that follow:
Consumption of Fixed capital 25.00
Government purchases 315.00
U.S. imports 260.00
Personal payments 45.00
Transfer payments 247.00

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