GDP: ( gross domestic product) total market value of all final goods and services produced within a country's borders within a given year
- Includes all production or income earned
- Excludes production outside of the U.S. even by Americans.
GNP: ( gross national product) A measure of what its citizens produce and whether they produce these items within its borders
- Includes production or income earned by Americans anywhere in the world.
- Excludes production by non-Americans even in the U.S.
Formula for GDP= C + Ig + G + Xn
Consumption=67%
Gross Private Domestic investment=18%
Government Purchases=17%
Net Exports=-2%
Included in GDP:
C + Ig + G + Xn
C + Ig + G + Xn
Excluded in GDP:
- Intermediate Goods- Inputs used to make final goods in order to prevent double or multiple counting.
- Used or second-hand goods
- Stocks/Bonds ( financial transaction, no output being produced)
- Unreported business activity("tips")
- Gifts and Transfer Payments [ public or private] :( no output, recipients contributes to nothing)
- Illegal Activities ( drugs)
- Non-Market activities
The percentages that are by the formula for GDP is helpful because I did not remember about it until I saw this post so thanks! For me, GNP is kinda tricky to understand and I don't focus on it, but what you said made sense. Now I know that GNP includes production or income earned by all American anywhere in the world. I would like to comment that for things that are excluded in GDP some examples would be nice to list. Like in Non-Market Activity, some examples are volunteer work, or family work like fixing you front door or mowing you lawn.
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