Gross National Product 

The conception of gross national product (GNP) is wide-ranging. It allows us to measure and examine on what quantity is that the aggregate economic production of a country during a given period. The gross national product of a country (GNP) is defined as the total money value of all final goods and services produced by the residents of a country in one year period. Within the words of W.C. Peterson, “Gross national Product is also defined as the current value of all final goods and services produced by the economy during an income period irrespective of where the output is produced.” the pupils of economics should remember the subsequent aspects about GNP.

1) GNP measures final output: While calculating GNP, the market value of only final goods and services produced in a year are added up. Final goods are those goods which are purchased for final use within the market.

2) GNP may be a flow concept: GNP represents a flow. It is a quantity produced per unit of time. It is the worth of final goods and services produced in a country during a given period of time.

3) GNP is output produced by the citizens of a country: Gross national product is that the final output of goods and services produced by the citizens and businesses of a country during a given period of time which is typically a year. For instance, the economic activity carried out by the country’s citizens and businesses outside the country is counted in GNP. While the income of the residents who do not seem to be country’s citizens is subtracted from GNP.

Modules of expenditure in GNP

To measure the GNP at market price, the economists use expenditure approach. Consistent with this approach, there are four categories of expenditures which are added together to measure gross national product (GNP) at market price.

1) Consumption

2) Investment

3) Government expenditure

4) Net exports.

To explained these all four kinds of expenditure in short.

1) Consumption Expenditure (C): It includes all personal expenditure incurred by the citizens of a country on durable and non-durable goods during a period of one year.

2) Investment (I): It is the entire expenditure incurred by firms or households on capital goods.

3) Government expenditures (G): It includes all sorts of expenditure incurred by Central government, Provincial government, and on the Councils level the purchases of goods and services like defense of the country, law and order, roads, railway lines, dams, street lighting etc.

Net Exports ( X - M ): Net exports of goods and services are value of exports minus the worth of imports.

GNP = C + l + G + ( X - M )

Where C stands for consumption, I stands for Investment, G stands for Government expenditure and X - M stands for Net Exports.