AP

PAMBANSA NG KITA (National Income)

Equation for GNI Calculation

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  Gross National Income (GNI) Formula:GNI = GDP + Net Factor Income From Abroad (NFIFA)This equation highlights the overall income generated by a nation, including what is earned by its residents abroad (incomes from foreign investments) and excluding what is earned by foreign residents within the nation.

Expenditure Approach

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  Expenditure Approach Formula:GNI = C + I + G + (X – M) + SD + NFIFAWhere:

  • C = Consumption (ordinary gastos ng tao)

  • I = Investment (gastusin ng negosyo para sa produksyon)

  • G = Government Spending (gastusin para sa imprastruktura at serbisyo ng gobyerno)

  • X = Exports

  • M = Imports

  • SD = Statistical Discrepancy

  • NFIFA = Net Factor Income From Abroad

This formula is crucial for determining how income flows through different sectors of the economy and is applied in assessing the economic health of a nation.

Importance of the Equation

• The GNI equation aids policymakers in formulating economic policies and understanding the economic framework of the country.

• It allows comparisons between countries by standardizing income data, thus enabling better economic planning and investment decisions.

Example of Application

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  If the GDP of the Philippines is 4 trillion pesos and the net factor income from abroad is 200 billion pesos, the GNI would be:GNI = 4,000,000,000,000 + 200,000,000,000 = 4,200,000,000,000 pesos.