GDP and GNP both represent the total market value of all nal goods and services produced usually wi...........

Economic and Social Issues Nature of Indian economy

GDP and GNP, both represent the total market value of all ?nal goods and services produced usually within a year, then which of the following is correct regarding the di?erence between GDP and GNP?

GDP takes into account the total market value of all ?nal goods and services produced within the territory of a country irrespective of their nationality whereas GNP takes into account the total market value of all ?nal goods and services produced by the nationals of a country irrespective of their territory.

GNP takes into account the total market value of all ?nal goods and services produced within the territory of a country irrespective of their nationality whereas GDP takes into account the total market value of all ?nal goods and services produced by the nationals of a country irrespective of their territory

There is no di?erence between the two, these are just terms that can be used interchangeably.

GDP – Depreciation = GNP

None of the above

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Explanation:

Gross Domestic Product (GDP): It is de?ned as the total market value of all ?nal goods and services produced within the country in a given period of me - usually a year.

In calculating GDP, we are not taking into account the income earned by citizens of India working abroad.
So, we need to ?nd a way to take into account the earnings made by Indians abroad or by the factors of production owned by Indians.
Also we must deduct the earnings of the foreigners who are working within our domestic economy or the payments to the factors of production owned by the foreigners.
To calculate this GNP is used.
GNP = GDP + Net Factor Income from Abroad

(Net factor income from abroad = Factor income earned by the domestic factors of production employed in the rest of the world – Factor income earned by the factors of production of the rest of the world employed in the domestic economy).
And GDP – depreciation will give us Net Domestic Product.