Question
Given the following data for an economy:
National Income: $700 billion Depreciation: $50 billion Indirect taxes minus subsidies: $30 billion Net factor income from abroad: $10 billion Calculate the GDP at market prices.Solution
GDP = NNP at factor cost + depreciation + Indirect taxes minus subsidies - Net factor income from abroad = 700+50+30-10 = 770 Note – National income is represented by NNP at factor cost and is therefore used directly in the above equation to calculate GDP.
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