Rohan is appointed an economics’professor in a reputed university. In his first lecture,
students asked him to elaborate on Gross Domestic Product (GDP) and Gross National
Product(GNP). Help Rohan to prepare his first lecture on the given topic with relevant
example and highlight the differences between the two concepts.
Answers
Answer:
I hope you have fun with your friend to come over
Answer:
DEFINITION OF GROSS DOMESTIC PRODUCT AND GROSS NATIONAL PRODUCT
Gross Domestic Product is the total monetary or market value of all the finished goods and services produced within a country's border in a specific time period
Gross National Product is the value of all goods and services made by a country's residents and businesses regardless of production location.
Explanation:
EXAMPLE OF GDP AND GNP
Abbreviation:
GDP - Gross Domestic Product
GNP - Gross National Product
GDP = The total consumer spending(C) + Business Investment (I) + Government Spending (G) + Net exports ( Total exports - Total import)
Examples of GDP include clothing, food and healthcare
GROSS NATIONAL PRODUCT
GNP = wages + Interest Income + Rental income + Profit
In simply terms
GNP = GDP +( Net income from abroad)
Gross National Product counts the investment made by Indian residents and business both inside and outside the country and computes the value of all products manufactured by domestic companies regardless where they are.
Example of GNP
Apple see it's product across the world. As the company is based in the United States, it's revenues across the world are counted within GNP for revenue go back to the United States even though the products are sold globally the money returns to the United States
Example 2 of GNP
The output of a Toyata plant in Kentucky isn't included in in GNP, although it is counted in GDP because the revenue from the sales of Toyota vehicles goes to Japan, even though the products are made and sold in United States. It is included in GDP because it adds to the health of the United States economy by creating jobs for Kentucky residents who use their wages to buy local goods and services
THE DIFFERENCES BETWEEN GDP AND GNP
GDP measures value of goods and services within a country's borders by citizens and non-citizen alike whereas GNP measures value of goods and services produced by only a country's citizen but both domestically and abroad
GNP is more accurate measure of country's income than GDP
GNP is also affected by changes in a country's currency exchange rate but that is not the case for GDP
GNP is not a good gauge to determine whether the economy is growing or contracting