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 Economics Paper 2, Nov/Dec. 2012
 Questions: 1 2 3 4 5 6 7 8 9 10 11 12 Main
Weakness/Remedies
Strength
Question 2

The table below shows the national income of a country in 1998.
Use the data to answer the questions that follow:

 ITEMS \$ MILLIONS Personal consumption expenditure Gross Private Domestic Investment Government expenditure Exports of goods and services Imports of goods and services Subsidies Indirect business taxes Consumption of fixed capital Net property income from abroad 640.00 180.00 220.00 175.00 202.00 48.00 322.00 115.00 80.00
1. Define Gross Domestic Product (GDP)

1. Calculate the:
2. Gross Domestic Product (GDP)
3. Gross National Product (GNP)
4. Net National Product (NNP)

1. (i)         Determine the National Income at factor cost from the

Net National Product (NNP).

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Observation

Most of the candidates were not attracted to this question.  The question required that candidates carry out simple calculations involving some estimates in national income accounting.  A good number of the candidates who attempted this question fell short of expectation.  This fact affected their scores negatively.  Candidates were expected to answer thus:

(a)        Gross domestic product (GDP) is the total market value of all final goods
and services produced annually in the country.

(b)        (i)         GDP = C + I + G + X - M
GDP = 640 + 180 + 220 + 175 – 202
= \$1,013.00 million

(ii)        GNP = GDP + Net property income from abroad
= 1,013.00 + 80.00
= \$1,093.00

(iii)       NNP = GNP – Consumption of fixed capital
= 1,093.00 – 115.00
=  \$978.00

(c)        (i)         National Income at factor cost =
= NNP at market price – Indirect taxes + subsidies
=  978 – 322 + 48
= \$704.00