QUESTION-1

Distinguish between GDP and GNP?

Gross domestic product (GDP):GDP refers to the market value of all goods and services
produced within a country in a given period. It is often considered an indicator of a country's standard of
living.GDP can be determined in three ways, all of which should, in principle, give the same result. They
are the product (or output) approach, the income approach, and the expenditure approach.

Gross National Product (GNP) : GNP is the market value of all products and services produced
in one year by labor and property supplied by the residents of a country.

GNP vs GDP:
GNP or gross national product and GDP or gross domestic product are both measures of
economic development.

Gross National Product:

1: Definition:
GDP (+) total capital gains from overseas investment (-) income earned by foreign nationals
domestically.

2: Formula for Calculation:

GNP = GDP + NR (Net income from assets abroad (Net Income Receipts)).

3: Doesn’t focused on output:

GNP is focused on who owns the production regardless of where the production takes place. GNP
calculates the value of output produced by the people (nationals) of the region.

Gross Domestic Product:

1: Definition:
An estimated value of the total worth of a country’s production and services, calculated over the
course on one year.

2: Formula for Calculation:GDP = consumption + investment + (government spending) +

(exports – imports.

3: Focused on Output:GDP is focused on output rather than who produced it, GDP measures all
domestic production.
QUESTION-2
Distinguish between Real GDP and Nominal GDP?

Real Gross Domestic Product:

The number reached by valuing all the productive activity within the country at a specific year's
prices. When economic activity of two or more time periods is valued at the same year's prices,
the resulting figure allows comparison of purchasing power over time, since the effects of
inflation have been removed by maintaining constant prices.

Nominal Gross Domestic Product:

Nominal GDP reflects Gross Domestic Product in today's prices. As opposed to Real GDP, which controls
the growth figure for the affects of inflation, Nominal GDP may increase due to either increased output
in an economy, or to increased prices in that economy.

Real GDP Vs Nominal GDP:

1: Basic Difference:

a)Real GDP: Real GDP is calculated by evaluating the prices of the goods and services, according to
market prices of any previous year, which is mostly termed as the base year for calculation.

b)Nominal GDP: It is the GDP calculated by valuing the goods and services produced by the country in
a financial year according to the market prices prevalent in that year.

2: Calculation:
a)Real GDP:Real GDP will take the prices of past years into consideration, the nominal GDP will take
current prices into consideration.

b)Nominal GDP: nominal GDP reflects the economy's productivity in the current year, according to
latest market prices.

3)what they account for:

a)Real GDP: Real GDP accounts for what money can buy, nominal GDP does not account for the
relative worth of currency.

b)Nominal GDP: Nominal GDP gives the raw data for production in a given year, regardless of
what the currency can actually buy.