GNP, along with gross domestic product, is the basic, most holistic and generalizing macroeconomic indicator, since production volumes make it possible to assess the economic power of a given country. The higher the GNP, the more products are produced by the branches of the national economy.
GNP Calculation Methods
GNP \u003d GDP + Balance of primary income received from abroad or transferred abroad (such first income usually includes wages, income from property in the form of dividends)
Nominal and real GDP
Due to the constant dynamics in the volume of production, the GDP of each country, as a rule, changes over time. If the volume of per capita GDP increases, then this indicates an increase in the standard of living of citizens of this society. On the contrary, the negative dynamics of GNP indicates economic crisis. Therefore, comparing the GDP of two different years, you can find out in which of them the standard of living of citizens was higher.
However, such comparisons raise the following problem. The fact is that GDP is measured in monetary units ah (rubles, dollars, euros, etc.), which in different years may have different purchasing power due to price changes. For example, if GDP was 1,000 monetary units in 2000 and 2005, and the price level rose over that period of time, then the standard of living actually went down because the same amount could buy less goods at the end of the period than at the beginning. Therefore, in order to be able to compare GDP in different years, it is necessary to take into account price dynamics. For this purpose, the concepts of nominal and real GDP are introduced.
Nominal GDP- volume of production in current year, expressed in prices of the current period.
Where Q- volume of goods or services produced, P- The price of a given product or service in the market.
Real GDP- volume of production in this year, but expressed in prices of the base period (for example, previous year, with which the value of GDP is compared; allows you to more accurately compare data by adjusting for price increases):
, Where P base
- the cost of a given product or service in the market at the time of the base period. To illustrate, consider the following example. Let the economy produce only two goods in 2000: goods 1 and goods 2. In 2000, 80 goods were produced. good 1, the price of which was 5 monetary units, and 50 pcs. item 2 at a price of 12 currency units per item. Therefore, nominal GDP in 2000 was: 80 x 5 + 50 x 12 = 1000 monetary units. Let, further, in 2005, 60 pieces were produced. item 1 at a price of 6 currency units and 40 pcs. item 2 at a price of 16 currency units. Nominal GDP in 2005 is: 60 x 6 + 40 x 16 = 1000 monetary units. Thus, nominal GDP has not changed over the years. However, due to rising prices, real GDP in 2005, i.e. 2005 output in 2000 prices, decreased: 60 x 5 + 40 x 12 = 780 monetary units.
Attitude nominal GDP to real GDP is called GDP deflator. For our example, the GDP deflator in 2005 is 1000 / 780 = 1.282. The GDP deflator shows how much the general price level in the economy increased (in this example, by 28.2%).
see also
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See what "Gross National Product" is in other dictionaries:
gross national product- — EN gross national product Gross domestic product adjusted for foreign transactions, i.e. to the figure for Gross Domestic Product must be added any income accruing to residents of … Technical Translator's Handbook
GROSS NATIONAL PRODUCT (GNP)- (gross national product GNP) (Political economy) the total monetary value of the final goods and services produced in the economy in a year, including income from overseas property ... Big explanatory sociological dictionary
Nominal gross national product- not adjusted for the price level of the product; reflects current prices, expressed in national currency at the current rate...
Potential gross national product - (economic potential) is the volume of production at full employment of resources. Full employment resources implies maintaining the share of unloaded production capacities at the level of 10-20% of their total volume and the natural rate of unemployment ... Dictionary by economic theory
Gross domestic product- (Gross domestic product, GDP) Definition of GDP, history of origin and calculation methods Information about the definition of GDP, history of origin and methods of calculation