Distinguish between Gross National Product and Net National Product.
|Points||Gross National Product||Net National Product|
|1. At Market Price (GNP(MP))||
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.
GNP(MP) = 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.
NNP(MP) – GNP(MP) = Depreciation
|2. 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.
In order to arrive at GNP at factor cost, we deduct indirect taxes from GNP at market prices and add subsidies to GNP at Market. Prices.
GNP(FC) = GNP(MP) - 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 year. It includes income earned by factors of production.
NNP(FC) - NNP(MP) - Indirect Taxes + Subsidies
|Gross National Product||Net National Product|
|It refers to the value of all goods and services produced by normal residents of a country both within the country as well as 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 as well as abroad.|
|It is inclusive of depreciation.||It does not include depreciation.|
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