Question

Consider the following information for a country:

Hint:

Remember: \[ NNP = GDP + NFIA - \text{Depreciation} \] where \(NFIA\) is the difference between factor income received from abroad and factor income paid abroad.

Answer 1

Correct Answer: 6680

Step 1: Recall the relationship between GDP, GNP, and NNP.
Net National Product \((NNP)\) is obtained after adjusting Gross Domestic Product \((GDP)\) for net factor income from abroad and depreciation.
The formula is
\[ NNP = GDP + NFIA - \text{Depreciation} \] where
\[ NFIA = \text{Net Factor Income from Abroad} \]

Step 2: Calculate Net Factor Income from Abroad (NFIA).
Net Factor Income from Abroad is calculated as
\[ NFIA = \text{Receipts of factor income from abroad} - \text{Payments of factor income to abroad} \]
Substituting the given values,
\[ NFIA = 200-220 \] \[ NFIA=-20 \]
This negative value means factor income paid to the rest of the world is greater than the factor income received from the rest of the world.

Step 3: Calculate Gross National Product (GNP).
Gross National Product is obtained by adding NFIA to GDP.
\[ GNP = GDP + NFIA \]
Substituting the values,
\[ GNP = 7500 + (-20) \] \[ GNP = 7480 \]

Step 4: Subtract depreciation to obtain NNP.
Net National Product is calculated as
\[ NNP = GNP - \text{Depreciation} \]
Substituting the values,
\[ NNP = 7480 - 800 \] \[ NNP = 6680 \]

Step 5: Verify the calculation directly.
We can also compute directly using the combined formula:
\[ NNP = GDP + NFIA - \text{Depreciation} \]
Substituting all values,
\[ NNP = 7500 + (-20) - 800 \] \[ NNP = 7500 - 20 - 800 \] \[ NNP = 6680 \]
Thus, the calculation is verified.

Step 6: Final conclusion.
Hence, the Net National Product \((NNP)\) of the country is
\[ \boxed{6680} \]