Question

Distinguish between Gross National Product and Net National Product.

Distinguish between:

‘Gross National Product’ at market prices and ‘Net National Product’ at factor cost.

Answer 1

Sr. No.	Points	Gross National Product	Net National Product
1.	Meaning	It refers to the value of all goods and services produced by normal residents of a country both within the country and outside the country.	It refers to the aggregate of all factor incomes earned by those factors of production that are normal residents of a country, both within the domestic country and abroad.
2.	At Market Price (GNPMP)	It means the gross value of final goods and services produced annually in a country, which is estimated according to the price prevailing in the market. Market price including cost of production + indirect taxes. GNPMP = C + I + G + (X−M) + (R−P)	Net national product at market price is the net market value of all final goods and services produced by the residents of a country during a period of one year. If we deduct depreciation from GNP at market prices, we get NNP at market prices. NNPMP – GNPMP = Depreciation
3.	At Factor Cost (GNP FC)	Gross national product at factor cost is the sum of the money value of the income produced by and accruing to the various factors of production in one year in a country. To arrive at GNP at factor cost, we deduct indirect taxes from GNP at market prices and add subsidies to GNP at market prices. GNPFC = GNPMP − Indirect Taxes + Subsidies	Net national product at factor cost is the net money value of all final goods and services produced by the residents of a country during a period of a year. It includes income earned by factors of production. NNPFC − NNPMP − Indirect Taxes + Subsidies
4.	Depreciation	It is inclusive of depreciation.	It does not include depreciation.