ECONOMIC ANALYSIS FOR MANAGERS
ECONOMIC ANALYSIS FOR MANAGERS
Q1.What is the difference between GNP and GDP?
Ans) The difference between GNP and GDP are as follow: GNP:
An estimated value of the total worth of production and services, produced in one year by labor and property supplied by the citizens of a country.
Allocates production based on location of ownership.
GNP=GDP + NR (Net income inflow from assets abroad or Net Income Receipts) - NP (Net payment outflow to foreign assets).
GDP:
An estimated value of the total worth of a country’s production and services, within its boundary, by its nationals and foreigners, calculated over the course on one year.
GDP = consumption + investment + (government spending) + (exports − imports).
Defines production based on the geographical location of production
Q2.Can GNP be greater than GDP?
When the calculations include only incomes received or expenditures made by a country citizen’s, the result is GNP. When the calculations are made of all incomes (or all expenditures) that originated with a country’s boundaries, including those of foreign citizens, the result is GDP.
GNP can be lesser and can be greater as well than GDP. It can be lesser if a country’s citizen or firms hold large amount of the stocks and bonds of other countries’ firms or governments, and receive income from them, GNP may be greater than GDP. In Saudia Arabia, for instance, GNP exceeded GDP by 7 percent in 1994.
Q3.Why do we use the market value in calculating GDP?
Ans) Market value is basically the retailer price at which household purchases goods and services. The counting of only goods produced in a country cannot help to differentiate between the items that differ in their value. For example it’s pretty easy to see that it doesn't make sense to count an orange the same in GDP as a television, nor does it make sense to count the television the same as a car. The GDP calculation accounts for this by adding up the market value of each good or service rather than
Q1.What is the difference between GNP and GDP?
Ans) The difference between GNP and GDP are as follow: GNP:
An estimated value of the total worth of production and services, produced in one year by labor and property supplied by the citizens of a country.
Allocates production based on location of ownership.
GNP=GDP + NR (Net income inflow from assets abroad or Net Income Receipts) - NP (Net payment outflow to foreign assets).
GDP:
An estimated value of the total worth of a country’s production and services, within its boundary, by its nationals and foreigners, calculated over the course on one year.
GDP = consumption + investment + (government spending) + (exports − imports).
Defines production based on the geographical location of production
Q2.Can GNP be greater than GDP?
When the calculations include only incomes received or expenditures made by a country citizen’s, the result is GNP. When the calculations are made of all incomes (or all expenditures) that originated with a country’s boundaries, including those of foreign citizens, the result is GDP.
GNP can be lesser and can be greater as well than GDP. It can be lesser if a country’s citizen or firms hold large amount of the stocks and bonds of other countries’ firms or governments, and receive income from them, GNP may be greater than GDP. In Saudia Arabia, for instance, GNP exceeded GDP by 7 percent in 1994.
Q3.Why do we use the market value in calculating GDP?
Ans) Market value is basically the retailer price at which household purchases goods and services. The counting of only goods produced in a country cannot help to differentiate between the items that differ in their value. For example it’s pretty easy to see that it doesn't make sense to count an orange the same in GDP as a television, nor does it make sense to count the television the same as a car. The GDP calculation accounts for this by adding up the market value of each good or service rather than