gdp

1. GDP
GNP

2.  GDP is market value of all final goods and
services produced within the domestic
territory of a country during a year. It
includes income from exports and payment
made on imports during the year. It does not
include the earnings of nationals working
abroad and foreign nationals working in our
country.


3.  As a rule, the final value of goods and
services at market price must be identical to
the cost involved in the production (at factor
cost). In real life it is not so, because prices
include indirect taxes.
 Hence GDP at Factor cost = GDP at
market prices –Indirect Taxes + subsidies.

5.  In this method the value of all goods and
services produced in different industries
during the year is added up. Only the final
goods and services are included and the
intermediary goods and services are left out.
According to this method in India the
economy is divided into eight broad sectors
including primary sector, secondary sector
and tertiary sector.

6.  Agriculture, Forestry and Fishing
 Mining and Quarrying, registered
 Manufacturing
 Electricity, Gas and Water Supply
 Construction
 Trade, Hotels, Transport and Communication
 Financing, Insurance, Real Estate and
Business services
 Community, Social and Personal Services

7.  One advantage of this method is that it
shows the relative contribution of each
sector to national income. In India
Production method is applied in primary
sector, income method in certain organized
sectors and average productivity of labour is
calculated in measuring national income in
service sectors

8.  The people of a country who produce GDP during a year
receive incomes from their work. National income is the
sum of factor incomes: rent, wages, interest and profit.
This method approaches national income from the
distribution side. In the income method the
remuneration to various factors are estimated. National
income is the summing up of the incomes of all
individuals (rent, wages, interest and profit) in the
country. This method indicates the distribution of
national income to different income groups


9.  This method arrives at national income by adding up all
the expenditure made on goods and services during a year.
GDP by expenditure method includes
 1) Private consumption expenditure on goods and services,
 2) Gross domestic private investment expenditure in fixed
capital such as residential and
 non residential building, machinery and inventories

10.  3) Government expenditure on final goods and services
 4) Export of goods and services produced by people of the
country
 5) Less imports. Expenditure on imports is subtracted.
 Thus we can get national income by summing up all
consumption expenditure and investment expenditure by
all individuals and government during a year.

11.  Another method of measuring national income is
the value added by industries. The difference
between the value of material outputs and
inputs at each stage of production is the value
added. If all such differences are added up for
all industries in the economy we arrive at the
gross domestic product.
 If double counting is fully avoided, the national
income calculated by final goods method and
value added method should be the same.

13.  GNP is the money value of all final goods and services
produced in a country during a year. In addition to
GDP it includes Net Factor Income from Abroad
(NFIA). NFIA is any income earned by residents from
overseas investments, minus income earned within
the domestic economy by foreign residents.
. GNP = GDP + net factor income from abroad (NFIA).

14.  When depreciation is deducted from GNP it is
called NNP. Some fixed capital wears out, or
damaged in the process of production. It is
called depreciation or capital consumption
allowance.