GDP DEFLATOR

DEFINE: GDP deflator is a measure of the total of prices of all new domestically
produced. Final goods and services in economy in year.

FORMULA :
IMPORTANCE OF GDP DEFLATOR

• GDP deflator is a price index (PI) that focuses on showing the impact of inflation
or deflation on the current prices in the economy thereby showing how dependent
and relative GDP is to price changes .
• GDP deflator’s flexibility allows the study of various economic phenomena
expenditure pattern study and consumption of the people. It changes with the
spending patterns
GROSS NATIONAL PRODUCT (GNP)

• DEFINATION: Gross national product is the value of all finished goods and
services produced by a country’s citizens in a given financial
year irrespective of their location .

FORMULA : GNP = C + I + G + X + Z
Where C is Consumption, I is investment, G is government, X is net
exports, and Z is net income earned by domestic residents from overseas
investments minus net income earned by foreign residents from domestic
investments.
IMPORTANCE

• It is used for finding solutions to the economic issues such as poverty and
inflation.
• When income is calculated on the basis of per person irrespective of the location
GNP becomes a much more reliable factor than GDP.
GNP at market prices

• DEFINATION : The market value of all final goods and services produced in the
domestic territory of a country by normal residents during an
accounting year including net factor income from abroad .

• FORMULA : GNPMP = GDPMP + Net factor income from abroad

IMPORTANCE
• Being gross it includes depreciation , being at market price it includes
net indirect taxes and being national it includes net factor income
from abroad .
• GNPMP is a core concept of national income accounting
• The basic of difference between GNPMP and GDPNP is net factor
income from abroad .
GNP AT FACTOR COST

• DEFINATION : The value of all final goods and services at market price
produced within the domestic territory of the country in an
accounting year including net factor income from abroad
minus net indirect taxes.
• FORMULA : GNP AT FACTOR COST = GNP AT MARKET PRICE - NET INDIRECT
COST
IMPORTANCE
• GNP is the most fundamental concept in national income earned by citizens of a
country during an accounting year.
• The gross national product is a mean of determining how much a country’s
citizens contribute to its economy .
• The money earned by foreign residents in the country is no included in GNP
NET NATIONAL PRODUCT

• DEFINATION : Net national product is the monetary value of finished goods

and services produced by a country’s citizens, overseas and
domestically in a given period.

• FORMULA : NNP=MVFG+MVFS−Depreciation
where: MVFG=market value of finished goods
MVFS=market value of finished services​
IMPORTANCE
• NNP is important within environmental finance. It is a model that can help show
the decrease in natural resources, and it can be used to see whether specific things
are sustainable within a specified environment.
• NNP looks at the value of goods and services that are also offered overseas. That
means that the revenue of Indian manufacturers in USA count toward the NNP of
India.