National Income — Economics STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceEconomicsNational Income3 Marks
Question
Write short note on Gross Domestic Product.
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Answer
Meaning of $GDP$ :
The concept of $GDP$ is an important concept of national income.
The market value of finished goods and services produced by citizens of country or foreign citizens within the boundary of the country or during the year is called gross domestic product, In short, within the boundaries of the country, the monetary value of finished goods and services I produced by the people of the country or foreigners is called $GDP$.
Important matters:
In gross domestic product, the final products or goods or services produced within the boundary by citizens and foreign citizens or by nature are considered.
The concept of gross domestic product is related with boundary of a country, The production by citizens of a country in a foreign country or the income generated by citizens of a country from foreign countries are not considered.
For economical progress of any country and to describe the progress of an economy the data of $GDP$ are used.
$GDP$ can be calculated by two ways:
By following the market value of final goods or services produced within the country.
By following income earned by the people of the country outside the country in form of wages, interest, rent or profit.
$GDP$ does not provide the true national income. Income generated by citizens of a country from abroad is not included in national income.
In the same way, the income earned by foreigners in the country does not add to the prosperity of the country yet, it is included in it. Thus, it does not give correct picture of total production or income.
If a country does not have any foreign trade or its import and export value are the same, there is no difference between $GDP$ and $GNP$.
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