GROSS DOMESTIC PRODUCT (GDP)

GROSS DOMESTIC PRODUCT (GDP)

GDP refers to the value of final goods and services produced within the country in a, particular year. GDP is different from GNP. A part of GNP may be produced outside the country For example the money earned by the Indians working in USA is a part of India's GNP But it is not a part of GDP since they are earned abroad. Therefore the boundaries of GNP are determined by the citizens of a country whereas the boundaries of GDP are determined by the geographical limits of a country. It is also clear that the difference between GDP and GNP is due to the "net revenue from abroad." If the citizens of a country are earning more from abroad than foreigners are earning in that country, GNP exceeds GDP If the foreigners in the country are earning more than its citizens are earning abroad, GNP is less than GDP.

Net National Product :-

This is a very important concept of national income. In the production of gross national product, during a year, some capital is used up or consumed i.e. equipment, machinery etc. the capital goods wear out or undergo depreciation.Capital goods fall in value due to its use in production process. By deducting the charges for depreciation from the gross national product, we get the net national product. It means the market value of all the final goods and services after providing for depreciation. It is called national income at market prices.In other words, net national product is the total value of final goods and services produced in the country during a year after deducting the depreciation, plus net income from abroad.

Net Domestic Products:-

NDP is obtained by subtracting the depreciation from the GDP. NDP differs from MNP due to the net income from abroad. If the net income from abroad is positive, NDP will be less than NNP If the net income from abroad is negative, NDP will be greater than NNP NDP is also calculated either-at market price or at factor cost.

National Income at Factor Cost:-

Means sum total of all income earned by resource suppliers for their contribution of land, labour, capital and entrepreneurial ability which go into the years net production. National income at factor cost shows how much it costs society In terms of economic resources to produce the net output. We use the term national income for the national income at factor prices.

National Income at factor cost = Net national product ( National Income at market prices) -(indirect taxes +Subsidies).