GROSS NATIONAL PRODUCT
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What is GNP? It is termed as a measure of economic growth. GNP can be defined as: Total market value of all final goods and services * Produced within a financial year, - By factors of production owned by a country's citizens regardless of where the output is being produced
EXPLANATION OF DEFINITION FINAL GOODS/SERVICES: Final goods/ services are produced for absolute final use Many goods produced in the economy in the economy are not classified as final goods instead as intermediate goods. Intermediate goods are produced by one firm for use, in further processing by another firm. Examples: Tyres/ Seat Covers/Engine/Glass sold to automobile industry.
EXPLANTION OF DEFINITIONN FACTORS OF PRODUCTION The factors of production are inputs used in the process of production. >The key factors are: Land ,Labour, Capital >The factors of production determine the cost incurred to produce a final good/ service. Land is paid rent. Labour is paid salary / remuneration Capital is paid interest
EXPLANTION OF DEFINITION OWNED BY COUNTRY'S CITIZENS: >The produce or income generated ahould be owned by the citizen of the country, irrespective of where the income is being 0eneraeaing in geographica boundanyp If a foreigner is earning in geographical boundary of India then his income will not be included in India's GNP
GDP v/s GNP It is important to compare the definitions of GDP and GNP and understand the difference between the two GDP is all the final goods produced within _a domestic territory irrespective of the person producing GNP is the final goods produced by_citizens of a country irrespective of where they are produced in the world.
NATIONAL v/s DOMESTIC National income and related aggregates are measures of production activity. There are two categories of national income aggregates: - Domestic and national, or - Domestic product and national product.
NATIONAL v/s DOMESTIC Production activity of the production units located within the economic territory is domestic product irrespective of whether carried out by the residents or non-residents i.e irrespective of whether performed by citizen of India or not. Whereas National Product includes production activities of residents irrespective of whether performed within the economic territory or outside it.(example: workers working in Gulf countries)
COMPUTATION OF NATIONAL PRODUCT National Products Domestic Product + Residents contribution to production outside the economic territory- Non- Residents contribution to production inside the economic territory.