Difference Between Gross Domestic Product (GDP) And Gross National Product (GNP)

Notes | Commerce
Difference Between GDP and GNP
For: Management Class 11

1. Gross Domestic product. (GDP)

GDP is the sum of money value of all final goods and services produced with in the domestic territory of country during a year. It should be noted that goods and services must be produced with in the country. In order to calculate the value of GDP, all goods and services produced are multiplied by their market prices.

GDP=∑ (P X Q)

Where, P= Price of goods and services.

Q= Quantity of goods and services.

In other words, GDP measures expenditures made on goods and services by consumer, business man, government and net foreign export of a country during a year.

GDP= C + I + G + (X – M)

Where,

C= Consumption expenditure.

I= Investment expenditure.

G= Government expenditure.

X= export.

M= Import.

(X – M) = Net export.

2. Gross National Product (GNP)

GNP is the most widely used concepts among different concepts of national income. GNP is defined as the total market value of all final goods and services produced annually form a country including

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