Maharashtra State BoardHSC Arts 12th Board Exam
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Gross National Product and Net National Product. - Economics

Distinguish between Gross National Product and Net National Product.

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Solution 1

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

Solution 2

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.
Concept: Concept of National Income
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