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PGD 130010
i)
Market value: GDP is a market valuegoods and services are valued at their market
prices.
Final goods and services: A final good (or service) is an item bought by its final user
during a specified time period.
Produced within a country: GDP measures production within a countrydomestic
production.
In a given time period: GDP measures production during a specific time period,
normally a year or a quarter of a year.
Investment (I) - total spending on goods that will be used in the future to produce
more goods.
Government Purchases (G) - all spending on the goods and services purchased by
government at the federal, state, and local levels.
Exports represent foreign spending on the economys goods and services. Imports
are the portions of C, I, and G that are spent on goods & services produced abroad.
Adding up all the components of GDP gives:
Y = C + I + G + NX
GDP = consumption + investment + (government spending) + (exports imports)
ii) GROSS NATIONAL PRODUCT (GNP)
GNP in general, means the total of all business production and service sector industry in
a country plus its gain on overseas investment. It was the total value of all final goods
and services produced within a nation in a particular year, plus income earned by its
citizens (including income of those located abroad), minus income of non-residents
located in that country. In some cases GNP will also be calculated by subtracting the
capital gains of foreign nationals or companies earned domestically.
Basically, GNP measures the value of goods and services that the country's citizens
produced regardless of their location. GNP is one measure of the economic condition of
a country, under the assumption that a higher GNP leads to a higher quality of living, all
other things being equal. Through GNP an accurate portrait of a nations yearly
economy can be analyzed and studied for trends since GNP calculates the total income
of all the nationals of a country.
GNP can also be calculated on a per capita basis to demonstrate the consumer buying
power of an individual from a particular country, and an estimate of average wealth,
wages, and ownership distribution in a society. GNP measures the total income earned
by residents of an economy from engaging in economic activities.
GNP can be solved using the formula:
GNP = GDP + Net factor income from abroad (difference between income
earned in foreign countries by residents of a country and income
earned by foreign nationals domestically).
GNP helps to measure the contribution of residents of a country to the flow of goods and
services within and outside the national territory.
Expenditure Approach to calculating GNP : GNP = GDP + NR (Net income from assets
abroad - Net Income Receipts).
iii)
GNI measures income received by a country both domestically and from overseas. In this
respect, GNI is quite similar to Gross National Product (GNP), which measures output
from the citizens and companies of a particular nation, regardless of whether they are
located within its boundaries or overseas.