National Income — Economics STD 12 Commerce / Arts — Question

1. It is an economy which is not open to international trade and foreign investment.
2. In a closed economy only the values of goods and services produced within the country are considered in the N.I. estimate.
3. Net exports and net factor income from abroad are not included.
4. GNP = GDP + C + I + G.

Open Economy:

1. It is an economy which is open to international trade and foreign investment.
2. In an open economy the values of goods and services produced within the country as well as net exports and net factor income from abroad are also considered in N.I. estimate.
3. Net exports and net factor income from abroad are included.
4. GDP(MP) = C + I + G + (X – M)
   GNP(MP) = GDP + (R – P)
   = C + I + 0 + (X – M) + (R – P)