In the economy of Alligator, there are only two firms A and B. During the course of the year:
Firm A imports raw materials costing GH¢ 8,000 and pays its workforce GH¢ 15,000 who produce output valued at GH¢ 30,000.
Firm B buys the output of Firm A for GH¢30,000 and pays its workforce GH¢ 20,000 who produce output which it sells for GH¢ 60,000.
The workers of firms A and B pay a total of GH¢ 5,000 in income tax out of their total income to government.
It has been estimated that the net factor income is GH¢ 2,000.
Firm A makes a profit of GH¢ 6,000 and pays corporate profit tax of GH¢ 2,000 to government.
Firm A estimated that a total of GH¢ 1500 worth of capital stock was used over the year.
Firm B also consumed GH¢ 1,000 worth of its capital.
Firm B makes a profit of GH¢ 10,000 out of which it pays a corporate profit tax of GH¢ 3,000 to government.
The government also levies an excise duty on every unit that the firms sold. Total indirect business taxes amounted to GH¢ 500.
Business and government transfer payments to individuals amounted to GH¢ 3,000
Firms A and B pay their post tax profits of GH¢ 1,000 and GH¢ 6,000 respectively as dividends to shareholders.
The output of firms A and B are sold as follows:
Sales to domestic consumers GH¢ 32,000
Sales to businesses GH¢ 9,000
Sales to government GH¢ 13,000
Sales to foreign buyers GH¢ 6,000
You are required to:
Calculate the value of the Gross Domestic Product by:
Expenditure approach
The value-added approach (calculating the value added at each stage of production)
Calculate NI income by the income approach
Calculate GNP, NNP and NI via the expenditure approach.
