Gross National Product Flashcards
What is GNP
Tot monetary value of all final g/s produced by the nationally owned f.o.ps
GNP=
GDP= income paid to foreign owned fops operating in domestic country
+
Income received from nationally owned fops operating abroad
GNP= (2)
GDP + Net Property tax from abroad
GNP is GDP adjusted for “Net Property Income from abroad”
GNP is +ve
GNP is +ve
- more nationally owned FOP than foreign owned FOP operating in our country
- earning more than we spend on these FOP
- Having more nationally owned FOP operating in our country than foreign owned FOP
GDP is at
market price
What does GNP require
receipt of factor incomes from national around of the world be added to GDP while payments of factor incomes to foreign owned FOP operating in geographical boundaries of the domestic country is subtracted
When GNP > GDP
There are more inflows of Net Property Income than outflows, Net Property Income is said to be positive or we receive more income from nationally owned FOP than what is paid to foreign owned FOP
When GDP> GNP
Net property income inflows are less than net property income outflows. I.e, net property income is -ve. We pay more money to foreign owned FOP than that which is received from nationally owned FOP
GDP at market price….
is the actual price paid by the consumer for the g/s
This includes govt interference in the form of indirect taxation and subsidies.
GDP at factor cost…
is the cost of producing the g/s hence, eliminating any govt interferrence
The calc of GDP using the exp approach results in
The valuation of GDP at market price, such market prices are distorted by govt interference in the form of indirect tax (VAT) and subsidies.
Indirect taxes…
Cause market prices to be hiher while subsidies cause prices to fallT
To eliminate those distortions
Indirect taxes are subtracted and subsidies are added to give GDP at factor cose
GDP at factor cost=
GDP at market price - (taxation + subsidies)
GDP at market price =
C + I + G + (X-M)
