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what is GDP and GNP????? - Printable Version

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what is GDP and GNP????? - Cancerian - 11-26-2004

Asslam o alaekum to all brothers

I have a confusion about Gross dosmestic product (GDP). According to book of PBP

(X-M) means export surplus and according to PBP it is included in GDP.

i have consulted Abdul Haleem Khawja and M. Saeed Nasir and also Habibi ullah waseer. According to them this is equation of GNP..

Please anyone clear me about this

i shall be very thankful to you.


- derivativetrader - 11-26-2004

Gross Domestic Product (GDP) is the most commonly used indicator of national income. It attempts to measure the sum of incomes received by the various wealth creating sectors of the economy manufacturing, agriculture, service industries.

The figures are 'gross' because GDP does not allow for the depreciation of physical capital - wear and tear on factory machines, office equipment becoming outdated etc.

When the value of income from abroad is included - what domestic companies earn abroad minus what foreign companies earn here and expatriate - then the GDP becomes the Gross National Product (GNP).


- Cancerian - 11-26-2004

thank you very very much, but please clear me more in terms of equation.

- Ice_Blue - 12-01-2004

Dear Cancerian,

according to my teacher, we should follow the equation given in PBP study text.

GDP = C + I + G + (X-M)

here (X-M) is the export surplus. a very good elaboration of the equation has already been done by derivativetrader.

for calculating GNP we should use the following equation

GNP = GDP + Net Property Income from abroad

I hope this clears the point. It would be better if u consult book written by foreign authors like Samuelson, Lipsey etc when u have any confusion.

Do tell me if i make any mistake/error as i am also a student of module-A like u.


Ice Blue

- majsonline - 12-02-2004

Dear Cancerian,

Here I'm summarizing the national income equations.

GDP = C + I + G + (X - M)
GNP = GDP + Net Factor Income received from abroad - Net factor
income taken away by foreigners by investment in the domestic

Do not get confused with whatever is written about GNP & GDP in the books you mentioned.