The total consumption expenditure in Polonia during a certain year was $135,000, total expenditure on investment was $44,000 and total expenditure incurred by the government was $50,000
Polonia exported goods worth $10,000 during that year and imported goods and services worth $12,000. Calculate the gross national product of Polonia if foreign factors of production added a value of $14,000 in the production of goods and services in Polonia while Polonian workers living abroad added a value of $8,000 to the production process in those countries.
The formula for calculating the Gross National Product of a country is:
GNP = GDP + production of domestic factors of production in foreign countries - production of foreign factors within domestic borders.
The formula for calculating GDP is:
GDP = C + I + G + X - M where C denotes consumption expenditure, I denotes investment expenditure, G denotes government expenditure, X denotes exports and M denotes imports. Therefore, GDP = $135,000 + $44,000 + $50,000 + $10,000 - $12,000 = $227,000.
GNP = $227,000 + $8,000 - $14,000 = $221,000.
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