The notion of the gross national product is not only related to the value of the final product which is produced by ordinary residents within the countrys domestic boundary. The concept of gross domestic product abstract the paper attempts to give a brief history of gross domestic product gdp and explain the concept of gdp and other related concepts. On the other hand, gross national product or gnp is the aggregate market value of all goods and services created or produced during a particular period and net factor income from abroad. Gdp or gross domestic product may be compared directly with gnp or gross national product, to see the relationship between a countrys export business and local economy. Therefore, it is essential for students to be aware of national income concepts. Practical implications the traditional gnp concept neglects significant distributive. For the economy as a whole, income equals expenditure because every dollar a buyer spends is a dollar of income for the seller. Gdp is also calculated by adding all the incomes generated by the act of production. Concepts of national income gross national product gnp. Gdp is also calculated by adding all the incomes generated by the act of. Concept of gdp, gnp, ppp purchasing power parity gross. Concept of national income national income accounting comprises of four concepts of calculations gdp, ndp, gnp, nnp. Sep 29, 2017 gdp, gnp, nnp, ndp, real gdp, nominal gdp, gdp deflator 1. Gdp gross domestic product is a measure of national income national output national expenditure produced in a particular country.
It provides an explanation of the concepts of gross domestic product and. Gdp in current dollars divided by implicit gdp price deflator x 100 describe the historical growth of population in the u. Thus in order to estimate the gross national product of india we have to add net factor income from abroad income earned by nonresident in india to form the gross domestic product of india. The gdp measures income, savings, credit purchases, commodity production and accumulation of capital. Even in some cases, direct questions come from these topics. Gross domestic product gdp is the total market value at current prices of all final goods and services produced within a year by the factors of production located within a country. There is a fight between the two measures, regarding which one is a better indicator of economic strength. Gdp measures the aggregate money value of output produced by the economy over a year. Gnp is the national income according to which imf ranks nations based on ppp or purchasing power parity. Gdp per capita indicator can be used as an approximate measure of the living standard. The sum of gross domestic product and the pure income from abroad is known as a gross national product.
The significant differences between gdp and gnp are discussed in this article excerpt. For example, if last year gdp of country is rs 100 and this year, it has increased to rs 110, then the growth rate of gdp is 10%. This is calculated at market prices and is known as gdp at market prices. Gross domestic product in any study of the aggregate economy, one of the key elements is the aggregate amount of goods and services produced over a certain period of time. We can understand this concept by understanding the national income definition. Thus, it is the net result of all economic activities of any country during a period of one year and is valued in terms of money. Disposable personal income you can download the pdf vers. It enables us to measure and analyze as to how much is the aggregate economic production of a country in a given period.
There are various concepts of national income, such as gdp, gnp, nnp, ni, pi, di, and pci which explain the facts of economic activities. Gdp nominal per capita does not, however, reflect differences in the cost of living and the inflation rates of the countries. Nov 15, 2019 the difference between these gdp and gnp is that while we calculate gdp, we take into consideration whatever is produced within the local borders of the country and so it includes the goods and services produced by the foreign nationals also but if we talk about gnp, only the production done by the countrys citizens is considered whether they are inside or outside the country and the. We have below listed the main basic concepts of them.
National income gross domestic product gross national product net domestic product net national product ankit singh bal046 2. Gross national product gnp is a broad measure of a nations total economic activity. National income means the value of goods and services produced by a country during a financial year. Introduction to concepts of national income youtube. It is a change in the growth rate of an economy, usually calculated on an annual basis, it can be calculated on a quarterly basis as well. Gdp conceptalong with the pieces of gdp available through the national accountsis useful in and of itself and should provide a great deal of information that is closely related to welfare. Gdp as a measure of economic wellbeing brookings institution. Indian economy key concepts by shankar ganesh pdf free. Gross domestic product, gross national product gross national income distinguish between gdp and gnpgni as measures of economic activity distinguish between the nominal value of gdp and gnpgni and the real value of gdp and gnpgni distinguish between total gdp and gnpgni and per capita gdp and gnpgni examine the output. Difference between gdp and gnp with comparison chart. In other words, gdp is obtained by valuing all final goods and services produced domestically in a year at market prices. The gross domestic product gdp can be defined as the market value of.
Gross domestic product gdp is a monetary measure of the market value of all the final goods and services produced in a specific time period. Here, we discuss them and other related terms in a very objective way. Basic concepts and methods of measurement of national income. Gnp is the value of all finished goods and services produced in a country in one year by its nationals. Gnp includes income earned by citizens and companies abroad, but does not include income earned by foreigners within the country. Download standard ebooks, economics optional, economy, gs3, prelims paper i gs, upsc tagged with. May, 2020 gross national product gnp is the value of all goods and services made by a countrys residents and businesses, regardless of production location. Indian economy national income mcqs with answers part 1 pooja 062318 sir please added me. National income definition, measurement, gdp, gnp, ndp. National income the sum of all incomes of the people of a country is a national income. The best way to compare gdp per capita by year or between countries is with real gdp per capita. Difference between gnp, gdp and gni economics help.
Gross domestic product gdp measures total income of everyone in the economy. Gross national product gnp is an estimate of total value of all the final products and services produced in a given period by the means of production owned by a. A regions gdp is one of the ways of measuring the size of its local economy whereas the gnp measures the overall economic strength of a country. We could therefore estimate that economic growth is the process of increasing the sizes of national.
It enables us to measure and analyze as to how much. Gross domestic product gdp is the value of a nations finished domestic goods and services during a specific time period. It is a quantitative concept and not qualitative concept. Gross national product gnp definition investopedia. Gross domestic product gdp vs gross national product gnp.
Indian economy national income mcqs with answers part 1 sk 083018 yes gnp is gdp of a country added with its income from abroad. It is the money value of all the final goods and services produced by a. Gross domestic product is the money value of all f inal goods and services produced by the factors of production within the domestic territory borders of a country during an accounting year. As a benchmark, a 2% growth in gdp is considered slow growth while a 4% annual growth is considered great. The key difference between gdp nominal and gdp ppp is that gdp nominal is the gdp unadjusted for the effects of inflation and is at current market prices whereas gdp ppp is the gdp converted to us dollars using purchasing power parity rates and divided by total population. Gdp is used as an indicator to compare countries to measure the economic performance of a country.
Gdp is the total value of goods and services produced within the country during a year. Gross national product is defined as the sum of the gross domestic product and net factor incomes from abroad. India ranked 4 th after usa, japan and china it is indicative of the qualitative as well as quantitative aspect of the economy. Jan 25, 2016 gross domestic product gross domestic product is the monetary value of all final goods and services produced in the domestic territory of a country during a year. Next, it proceeds to explain the significance of this concept and lists approaches of gdp calculation. The difference in the value of countries gdp and gnp is usually rela.
The main difference is that gnp gross national product takes into account net income receipts from abroad. The most important measure of economic activity in a country, the gross domestic product is the crossing point of three sides of the economy. Gdp, or gross domestic product is calculated either by measuring all income earned within a country, or by measuring all expenditures within the country, which should approximately be the same. Gross domestic product gdp or pil in i talian is the best known and most widely used measure of the economic size of nations. Although both gdp and gnp are technical quantities, they have. Gnp, or gross national product uses gdp, but adds income from foreign sources, less income paid to foreign citizens and entities. Factor cost is the input cost that producer has to incur in the process of production. Concepts, measures, and data bingsong fang and xiaoli han, macrosys research and technology, washington, dc, usa introduction gross domestic product gdp is widely accepted as the most comprehensive measure of the size of an economy.
The measure most often used in the united states is called the nominal gross domestic product the gdp. As a measure of wellbeing of a country for international and temporal comparisons, it provides a good first approximation. A descriptive study the concept of gross domestic product. I ts rate of change is the measure by which w e assess the general. There are a number of concepts pertaining to national income and methods of measurement relating to them. Gdp and the new concept of development 69 on 4 october 1979, the chief architect of chinas reform and openingup, deng xiaoping, for the first time used the gross national product gnp indicator to define chinas economic growth target, in a speech at the meeting of the first. The labor and capital of a country working on its natural resources produce a certain aggregate of commodities, material and nonmaterial every year.
The concept of gross national product gnp is comprehensive. Gdp concept along with the pieces of gdp available through the national accountsis useful in and of itself and should provide a great deal of information that is closely related to welfare. An alternative concept, gross national product, or gnp, counts all the output of the residents of a country. A related but different metric, the gross national product gnp, is the. Gross domestic product gdp gross domestic product is the value of all the final goods and services produced within the boundary of a nation during one year period. Changes in national income measure the rate of growth of the economy. Gross national product is the value of all finished goods and services. Indian economy national income mcqs with answers part 1. There is a nominal difference between gdp and gnp figures of a. Significance the most important measure of economic activity in a country, the gross domestic product is the crossing point of three sides of the economy.
Mar 24, 2020 gross domestic product gdp is the value of a nations finished domestic goods and services during a specific time period. Pdf purpose world wide, the gross national product gnp has been and still is the basic. Measuring economic activity gdp and gnpgni output, income and expenditure methods of gdp accounting. This concept takes country as the unit of observation, uses its income or gdp per capita, disregards its population, and thus compares, as it were, representative individuals from all the countries in the world. Nov 21, 2019 gnp and gdp both reflect the national output and income of an economy. Gross national product gnp is the value of all goods and services made by a countrys residents and businesses, regardless of production location. Real income is a term used in economics which can be defined as a set of. Gross domestic product gdp and gross national product gnp. The concept of gross domestic product and other related concepts in the output approach, gdp is defined as. National income meaning, concepts, aggregates, methods. Gnp includes income earned by citizens and companies abroad, but does not include income earned by. The gdp is used to express growth rate of an economy. Transportation, as a component of the economy, naturally is.