Gross National Product

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Gross National Product (GNP):

Gross National Product (GNP) By: Prof.Sharan Kumar Shetty

GNP:

GNP The Gross National Product (GNP) is the total value of all final goods and services produced for consumption in society during a particular time period including net factor income from foreign countries.

Calculation of GNP:

Calculation of GNP GNP can be calculated using the following formula: GNP= GDP + NFIA where, GDP = Gross Domestic Product NFIA = Net factor income from abroad

Net Factor Income from the Rest of the World (NFIA):

Net Factor Income from the Rest of the World (NFIA) Consists of the net income receipts from the rest of the world such as: Investment incomes including interest, dividends, and branch profits; Earnings of residents working abroad; and Other factor incomes of normal residents. This item therefore represents the difference between factor incomes of residents from abroad and the income accruing to foreign suppliers of factor services.

Measurement of Gross National Product :

Measurement of Gross National Product GNP can be measured at: Current market prices (Nominal GNP): In this method, the prices of goods and services are measured at prices prevailing in the current year. Constant prices (Real GNP): Using this method, GNP is measured at a fixed price of a particular base year.

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GNP helps to measure the contribution of residents of a country to the flow of goods and services within and outside the national territory. Hence, GNP is the core concept of national income accounting.

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