Unit 3.1·Macroeconomics

Calculation: Nominal GNI

Measuring Economic Activity and Illustrating Its Variations

AO2·AO4

Syllabus requirement

Students must calculate GNI by adjusting GDP with net income from abroad (factor income). Nominal GNI = Nominal GDP + (Factor income received from abroad – Factor income paid abroad)

Assessment objectives

AO2 Application and AnalysisAO4 Use of Appropriate Skills

Summary

This topic explains nominal gross national income (GNI), which measures the income earned by a country's factors of production regardless of where those factors are located, and how it differs from gross domestic product (GDP). It shows that nominal GNI is measured at current prices (so it includes price-level changes) and is calculated by adding net factor income from abroad to nominal GDP. Understanding nominal GNI matters because it adjusts domestic production (GDP) for cross-border income flows to show the income that actually accrues to residents.