National Income — Economics STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceEconomicsNational Income3 Marks
Question
Write an short note on Gross National Product $(GNP).$
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Answer
Introduction :
It is the base to measure the total production factors of production and services.
The concept of $GNP$ is connected with the ownership of factors of production.
During the year the total monetary value of goods and services produced in a country and foreign country is called $GNP$.
In other words foreign factor & finished goods produced in the country are taken into consideration.
In short the monetary value of goods and services produced by citizens of country during a year is called $GNP$.
Important Points :
Gross national income can be also be known as Total National Product.
In $GNP$ only current year's value of goods and services is taken into calculation and previous year's value and goods are not taken.
The concept of $GNP$ is connected to the ownership of factors of production.
In $GDP$ income of citizen of our country living in foreign country is added and income of foreign citizens living in our country is deducted.
In short, $GNP = GDP\ +$ Net income from Foreign Trade
In $GDP$ only production made by the people of the country is calculated therefore true idea of national production cannot be availed. While in $GNP$, net income made from foreign factor is also added.
Thus the limitations of $GDP$ have been overcome here.
The foreign citizens living in the country produce goods and receives but they do not belong to the country.
In $GDP$ it is included but in $GNP$ it is not considered.
The citizen of the country living in foreign countries produce goods and services.
These goods belong to our country. It is not counted in $GDP$ but in $GNP$ it is included.
In general transactions monthly $GNP$ value is considered.
This concept gives better idea of the situation of production and employment of the country during a period of time.
To know the $GNP$ of any country, it is necessary to know country's value of agro goods, industrial production, trade etc. of different factors during a fixed one year's period of time.
To calculate $GNP$, finished good are taken into consideration. Sale of unfinished goods or raw material is not taken into consideration.
Current year's market value of produced goods and service are taken for calculation of $GNP$. Previous year's production is not taken into calculation.
$GNP$ can be calculated by three method Production, income and expenditure method.
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