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    Economics 9 - National Income

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    Oliver Villanueva
    The document discusses different approaches to measuring national income: gross domestic product (GDP) and gross national product (GNP). It defines GDP and GNP, and describes three approaches to calculating GNP: final expenditure, factor income, and value-added. Examples of computing GNP using the final expenditure approach are also provided.

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    Economics 9 - National Income

    Uploaded by

    Oliver Villanueva
    8 views31 pages
    The document discusses different approaches to measuring national income: gross domestic product (GDP) and gross national product (GNP). It defines GDP and GNP, and describes three approaches to calculating GNP: final expenditure, factor income, and value-added. Examples of computing GNP using the final expenditure approach are also provided.

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    ECONOMICS 9 - NATIONAL INCOME

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    The document discusses different approaches to measuring national income: gross domestic product (GDP) and gross national product (GNP). It defines GDP and GNP, and describes three approaches to calculating GNP: final expenditure, factor income, and value-added. Examples of computing GNP using the final expenditure approach are also provided.

    Copyright:

    © All Rights Reserved
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    Download as pptx, pdf, or txt
    8 views31 pages

    Economics 9 - National Income

    Uploaded by

    Oliver Villanueva
    The document discusses different approaches to measuring national income: gross domestic product (GDP) and gross national product (GNP). It defines GDP and GNP, and describes three approaches to calculating GNP: final expenditure, factor income, and value-added. Examples of computing GNP using the final expenditure approach are also provided.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 31

    National Income

    Macroeconomics
    Learning objectives;
    ● Analyze GDP and GNP as a measurement of the
    economy’s state;
    ● Identify the approaches in measuring GNP; and,
    ● Analyze the importance of national income in the
    economy.
    National Income
    ● Refers to the value of goods
    and services produced by a
    country in a year.
    How do we measure the National
    Income?

    GNP &
    Gross National Product (GNP) /
    Gross National Income (GNI)
    Gross Domestic Product (GDP)

    GDP
    Gross National Product (GNP)
    ● Refers to the overall value of final goods and
    services produced by the citizens of a country
    within a year.

    ● Final products are products that no longer


    undergo the process of consumption like clothes,
    bread, and furniture, products that are ready for
    consumption.

    ✓ Final Product

    ✕ Raw material
    Gross National Product (GNP)
    ● Hindi mga hilaw na sangkap ● Yung TAPOS NA !
    Not included in computing
    the GNP
    ● Informal Sector/ Underground Economy
    GNP
    Gawa Ng Pilipino
    Gross Domestic Product (GDP)
    ● Refers to products produced or income made
    in the country.

    ● GDP includes the income of foreigners working


    in the country.

    ● Gawa Dito sa Pilipinas.


    How to compute the Gross National
    Product?
    ● There are three ways in determining the GNP. These
    are final expenditure, factor income, and value-added
    approach.
    ● Final Expenditure Approach
    ● Factor Income Approach
    ● Value-added Approach
    1. Final Expenditure Approach
    ● Computation of GNP using the final expenditure approach is
    composed of the total expenditure of the household, firm,
    government, and rest of the world.

    GNP = C + I + G + (X-M) + NFYA


    ● C = personal consumption expenditure
    ● I = investment
    ● G = government expenditure
    ● X = exports
    ● M = imports
    ● (X-M) = net exports/balance of trade
    ● NFYA = net factor income from abroad
    1. Final Expenditure Approach
    ● Sample
    GNP = C + I + G + (X-M) + NFYA
    ● C = 50,000
    ● I = 120,000
    ● G = 70,000 GNP = 50,000 + 120,000 + 70,000 + 10,000 +12,000
    ● X = 30,000
    ● M = 20,000
    ● (X-M) = 10,000 GNP = 262,000
    ● NFIA = 12,000
    1. Final Expenditure
    Approach
    GNP = C + I + G + (X-M) + NFYA

    GNP = 8, 640, 203


    Activity: Compute the GNP of the Philippines using the
    Final Expenditure Approach

    Expenditure 2017
    Personal Consumption Expenditure (C) 5, 325, 685
    Government Consumption (G) 982, 256
    Capital Formation (I) 1, 124,325
    Exports (X) 4, 985, 666
    Less Imports (M) 4, 900, 510
    Statistical Discrepancy 0
    GDP 9, 511, 540
    Net Factor Income from Abroad 1, 716, 850
    GNP
    2. Factor Income Approach
    ● Is also used to compute for GNP.
    ● The factor income approach uses data from income
    received by the household, firm, government, and
    external sector.
    ● GNP = compensation of employees + interest
    + rent + undistributed corporate profits +
    indirect business - excise tax and VAT +
    depreciation.
    ● Depreciation is the decrease in the value of capital
    overtime because of usage.
    Sa Umpisa lang Sweet
    3. Value-added Approach
    ● refers to the additional value of a product as it goes through production.
    3. Value-added
    Approach

    GNP = 8, 640, 203


    Nominal and Real
    GNP/GDP
    Nominal GDP
    ● Is the market value of goods and services produced in an economy,
    unadjusted for inflation.
    Year Quantity Price Nominal GDP

    2018 1000 sack of corn 100 per sack 100,000


    (1000x100)

    2019 1000 sack of corn 300 per sack 300,000


    (1000x300)
    Real GDP
    ● Is nominal GDP, adjusted for inflation to reflect changes in real output.
    Year Quantity Price Nominal GDP

    2018 1000 sack of corn 100 per sack 100,000


    (1000x100)

    2019 1500 sack of corn 300 per sack 150,000


    (1500x100)
    Real and Nominal GNP of the Philippines
    for the year 2011-2017
    ● We can use the formula
    below to gauge the growth
    of production

    ● There is a 9.04% increase


    in the national income from
    2016-2017.
    17,430,338 - 16,114,406
    X 100
    Growth in GNP
    16,114,406
    (2015-2016) =

    Growth in GNP 1,315,932


    X 100
    (2015-2016) =in
    16,114,406
    GNP =

    Growth in GNP 8.17 %


    (2015-2016) =
    Activity:
    Personal Consumption Expenditure - 69M
    Investment - 9M
    Government Expenditure - 20M
    Export = 6M
    Import = 3M
    NFIA - 2.8M

    Compute for the ff;


    1. GDP -
    2. GNP -

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