1. Gross Domestic Product (GDP)

  1. GDP is the total monetary value of all final goods and services produced within a country's borders in a given time period.
  2. It includes production by domestic and foreign companies operating within the country.
  3. Nominal GDP is measured at current market prices, while Real GDP adjusts for inflation.
  4. GDP Growth Rate indicates the rate of economic expansion or contraction.
  5. GDP is divided into three sectors: agriculture, industry, and services.
  6. The formula for GDP (expenditure method) is: GDP = C + I + G + (X - M), where C = consumption, I = investment, G = government spending, and (X - M) = net exports.
  7. GDP is a key indicator of a country's economic health.

2. Gross National Product (GNP)

  1. GNP is the total monetary value of all final goods and services produced by a country's citizens and businesses, regardless of their location.
  2. It includes income earned by citizens abroad but excludes income earned by foreign residents within the country.
  3. Formula: GNP = GDP + Net Factor Income from Abroad (NFIA).
  4. GNP is a better measure of a country's economic contribution globally.
  5. A negative NFIA indicates that foreign residents earn more income within the country than citizens earn abroad.

3. Net National Product (NNP)

  1. NNP is the monetary value of all final goods and services produced by a country's citizens, adjusted for depreciation.
  2. Depreciation refers to the worn-out or consumed capital goods during the production process.
  3. Formula: NNP = GNP - Depreciation.
  4. NNP represents the net economic output available to the country for consumption and investment.
  5. If depreciation is high, NNP will be significantly lower than GNP.

4. Net Domestic Product (NDP)

  1. NDP is the total value of all final goods and services produced within a country, adjusted for depreciation.
  2. Formula: NDP = GDP - Depreciation.
  3. NDP provides a measure of the country's net economic activity within its borders.
  4. It reflects the sustainability of current economic production without depleting capital goods.

5. Key Differences Between Concepts

  1. GDP focuses on domestic production, while GNP includes income from citizens abroad.
  2. NDP and NNP account for depreciation, unlike GDP and GNP.
  3. GDP and NDP are based on geographical boundaries, whereas GNP and NNP are based on nationality.

Key Points

  1. GDP measures the total monetary value of all final goods and services produced within a country's borders.
  2. Nominal GDP is measured at current prices, while Real GDP adjusts for inflation.
  3. The expenditure method formula for GDP is: GDP = C + I + G + (X - M).
  4. GNP includes production by a country's citizens, regardless of their location.
  5. Formula for GNP: GNP = GDP + Net Factor Income from Abroad (NFIA).
  6. Depreciation is the reduction in the value of capital goods over time.
  7. NNP accounts for depreciation: NNP = GNP - Depreciation.
  8. NDP is the net domestic production: NDP = GDP - Depreciation.
  9. GDP measures domestic activity, while GNP measures national contribution globally.
  10. A negative NFIA means foreign earnings within the country exceed citizens' earnings abroad.
  11. Real GDP is a better indicator of economic growth as it eliminates inflation effects.
  12. NNP reflects the economic output available for investment and consumption.
  13. High depreciation lowers NNP and NDP compared to GNP and GDP.
  14. GDP growth rate indicates the health of the economy.
  15. GNP is used to assess the global economic contribution of a country's citizens and businesses.

Questions

  1. What does GDP stand for?
  2. GDP at market prices includes which of the following?
  3. How is GNP different from GDP?
  4. Which of the following is subtracted to calculate NDP from GDP?
  5. NNP at market prices is obtained by deducting which of the following from GNP?
  6. Which of these is NOT included in the calculation of GDP?
  7. What does NDP stand for?
  8. The difference between GNP and NNP is:
  9. GDP at constant prices is also known as:
  10. The value of goods and services produced within a country’s borders is referred to as:
  11. Which component is part of GDP by expenditure method?
  12. Which of the following best defines GNP?
  13. The formula for GDP by income method includes:
  14. GDP at current prices is also known as:
  15. Which economic indicator is used to measure the standard of living in a country?
  16. In national income accounting, depreciation is also referred to as:
  17. The net factor income from abroad is included in:
  18. Which measure excludes the effect of price changes in national income accounting?
  19. What is added to NDP to calculate GDP?
  20. The term "final goods and services" in GDP calculation excludes:
  21. GNP at factor cost is obtained by subtracting which of the following from GNP at market prices?
  22. NNP at factor cost is also known as:
  23. Which of the following is included in the calculation of GDP?
  24. Which method of calculating GDP considers production in agriculture, industry, and services?
  25. The expenditure method of GDP includes which of the following?
  26. Net National Product (NNP) is calculated by subtracting what from GNP?
  27. Personal income is derived from national income by:
  28. If GDP is $500 billion and depreciation is $50 billion, what is the NDP?
  29. Which component is NOT included in the calculation of GNP?
  30. The GDP deflator is used to measure: