Gross Domestic Product (GDP)

•ISTHE VALUE OF ALL FINISHED GOODS

AND SERVICES OWNED BY A COUNTRY’S
RESIDENTS OVER A PERIOD OF TIME
.
GROSS NATIONAL PRODUCT
(GNP)

• IT INCLUDES THE VALUE OF ALL GOODS AND

SERVICES PRODUCED BY NATIONALS
WHETHER IN THE COUNTRY OR NOT
WE SHOULD REMEMBER THE FOLLOWING
ASPECTS ABOUT GNP;

(i) GNP is a flow concept

(ii)GNP measures final output
(iii)GNP is output produced by the
citizens of a country:
HOW IS GDP DIFFERENT THAN GNP

GDP MEASURES THE VALUE OF GOODS

AND SERVICES PRODUCED WITHIN A
COUNTRY’S BORDERS, WHILE GNP
MEASURES THE VALUE OF GOODS AND
SERVICES PRODUCED BY A COUNTRY’S
CITIZENS DOMESTICALLY AND ABROAD.
HOW DOES GDP AND GNP AFFECT THE ECONOMY?

GDP IS USED TO MEASURE THE

STRENGTH OF A COUNTRY’S DOMESTIC
ECONOMY WHILE GNP IS USED TO
MEASURE HOW THE NATIONAL OF A
COUNTRY ARE CONTRIBUTING
ECONOMICALLY.
FORMULA FOR GROSS NATIONAL PROFIT :

GNP = C + I + G +(X-M)
where :
C = Consumption
G = Govt.expenditure
I = Investment
X-M = Net exports
 Transfer Payments 54,000
Interest Income 150,000
Depreciation 36,000
• COMPUTE Wages 67,000
FOR GNP Gross Private Investment (I) 124,000

Business Profits 200,000

Indirect Business Taxes 74,000

Rental Income 75,000

Net Exports (X-M) 18,000
Net Foreign Factor Income 12,000

Government Purchases (G) 156,000

Household Consumption (C) 304,000

GNP= C + I + G + (X-M)

GNP = 304,000 + 124,000 + 156,000 + 18,000

GNP = 602,000
FORMULA FOR GDP :

GDP = GNP-(NFIFA)

THERE
GNP = C + I + G + (X-M)
NFIFA = NET FOREIGN INCOME FROM ABROAD