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ECON 1580 Discussion Assignment Unit 6

The document provides steps to calculate a country's gross national product (GNP). It defines GNP as equal to GDP plus net factor earnings from abroad. It computes GDP by adding consumption, government purchases, investment, and subtracting net exports. Net exports are calculated as exports minus imports. Finally, it calculates GNP as GDP plus net foreign investment, which is foreign bond purchases plus earnings on foreign investments minus foreign earnings on domestic investments.

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163 views1 page

ECON 1580 Discussion Assignment Unit 6

The document provides steps to calculate a country's gross national product (GNP). It defines GNP as equal to GDP plus net factor earnings from abroad. It computes GDP by adding consumption, government purchases, investment, and subtracting net exports. Net exports are calculated as exports minus imports. Finally, it calculates GNP as GDP plus net foreign investment, which is foreign bond purchases plus earnings on foreign investments minus foreign earnings on domestic investments.

Uploaded by

Tesfahun
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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The gross national product (GNP) is computed by adding government spending, individual

consumer spending, private domestic investments, net exports, and income earned by citizens
overseas to the home economy, while omitting income from foreign residents.

1. Compute net foreign investment.Net foreign investment = Bond Purchases +Earnings


on foreign investments - Foreign earningson Amagre investment
= 200 + 75 - 25 = 250 billion G
I added Bond purchases and earnings on foreign investments and subtracted foreign earnings
by using the formula
2. Compute net exports.
Net exports = Exports - Imports
= 50 - 150
= -100 billion G

3. Compute GDP. GDP = Consumption + Government purchases + Investment +


Net exports
= 350 + 200 + 100 – 100
= 550 billion G
4. Compute GNP.GNP = GDP + Net factor earnings from abroad
= 550 + (75 - 25)
= 600 billion G
Reference
Business Standard (2021) WHAT IS GROSS NATIONAL PRODUCT (GNP) Retrieve from
https://www.business-standard.com/about/what-is-gross-national-product-gnp#:~:text=The
%20formula%20for%20GNP%20%3D%20GDP%20%2B%20Net,income%20earned%20by
%20foreign%20residents%20from%20domestic%20investments.

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