Search for:. Try It. Glossary depreciation: the process by which capital ages and loses value gross domestic product GDP : the value of the output of all final goods and services produced within a country in a year gross national product GNP : includes what is produced domestically and what is produced by domestic labor and business abroad in a year national income: all income to businesses and individuals net national product NNP : GDP minus depreciation personal income: income made by individuals.
Did you have an idea for improving this content? Licenses and Attributions. It is possible for a citizen in one country to produce goods and services in many countries simultaneously over the Internet or through modern supply chains. This raises definitional and accounting issues for GNP calculations.
Contemporary macroeconomics stresses the importance of spending in a national economy. Suppose a German automaker builds a car manufacturing plant in Alabama.
According to demand-side theory, the jobs created in Alabama increase spending and create economic growth in the U. The U. However, some economists question the validity of using GDP to compare different economies or the same economy across time. One issue these economists raise is inflation. However, inflation can be accounted for by creating reliable price indexes and adjusting for standardized values. A second issue is population size: China and India have many more possible producers and consumers than, say, Switzerland or Ireland.
There are other objections as well, but almost all contemporary accounts of economic size and growth are tracked in terms of GDP. Income Tax. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. List of Partners vendors. Your Money. Personal Finance. Your Practice. Popular Courses. Economics Macroeconomics.
Key Takeaways GNP measures the output of a country's residents regardless of the location of the actual underlying economic activity. Income from overseas investments by a country's residents counts in GNP, and foreign investment within a country's borders does not. This is in contrast to GDP which measures economic output and income based on location rather than nationality.
What is gross national product? What is the difference between gross national product and gross domestic product? What is an example of gross national product?
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