(a) Why is it important to estimate National Income of a country? What difficulties do economists encounter while carrying out such a task particularly in developing countries? (10 marks)
(b) The table below represents economic transactions for country XYZ in billions of shillings:
Total Output Intermediate purchases
Agriculture 30 10
Manufacturing 70 45
Services 55 25
Required:
(i) Calculate the Gross Domestic Product of this economy using the value
added approach. (3 marks)
(ii) If depreciation and indirect taxes equal 8 billion and 7 billion shillings respectively, determine the Net Domestic Product both at market prices and at factor costs. (7 marks)
(Total: 20 marks)