gross national product

Examples of gross national product in the following topics:

• Economic measures

  • There are a number of ways to measure economic activity of a nation.
  • The Gross Domestic Product or GDP of a country is a measure of the size of its economy.
  • The Gini coefficient (also known as the Gini index or Gini ratio) is a measure of statistical dispersion intended to represent the income distribution of a nation's residents.

• National Income

  • A variety of measures of national income and output are used in economics to estimate total economic activity in a country or region, including gross domestic product (GDP), gross national product (GNP), net national income (NNI), and adjusted national income (NNI* adjusted for natural resource depletion).
  • Arriving at a figure for the total production of goods and services in a large region like a country entails a large amount of data-collection and calculation.
  • The actual usefulness of a product (its use-value) is not measured – assuming the use-value to be any different from its market value.
  • The income approach equates the total output of a nation to the total factor income received by residents or citizens of the nation:
  • GDP = C + I + G + ( X - M ); where C = household consumption expenditures / personal consumption expenditures, I = gross private domestic investment, G = government consumption and gross investment expenditures, X = gross exports of goods and services, and M = gross imports of goods and services.

• Learning from GDP

  • There are two commonly used measures of national income and output in economics, these include gross domestic product (GDP) and gross national product (GNP).
  • This avoids an issue referred to as double counting, where the total value of a good is included several times in national output, by counting it repeatedly in several stages of production.
  • Formula: GDP (gross domestic product) at market price = value of output in an economy in the particular year - intermediate consumption at factor cost = GDP at market price - depreciation + NFIA (net factor income from abroad) - net indirect taxes.
  • Formula: GDI (gross domestic income, which should equate to gross domestic product) = Compensation of employees + Net interest + Rental & royalty income + Business cash flow
  • Formula: Y = C + I + G + (X - M) ; where: C = household consumption expenditures / personal consumption expenditures, I = gross private domestic investment, G = government consumption and gross investment expenditures, X = gross exports of goods and services, and M = gross imports of goods and services.

• Defining GDP

  • Gross domestic product is the market value of all final goods and services produced within the national borders of a country for a given period of time.
  • Gross domestic product (GDP) is the market value of all final goods and services produced within the national borders of a country for a given period of time.
  • "X" (exports) represents gross exports.
  • "M" (imports) represents gross imports.
  • Depreciation (or Capital Consumption Allowance) is added to get from net domestic product to gross domestic product.

• Other Approaches to Calculating GDP

  • Gross domestic product provides a measure of the productivity of an economy specific to the national borders of a country .
  • "National Income and Expenditure Accounts" divide incomes into five categories:
  • Depreciation (or Capital Consumption Allowance) is added to get from net domestic product to gross domestic product.
  • GDP = compensation of employees + gross operating surplus + gross mixed income + taxes less subsidies on production and imports.
  • In practice, however, measurement errors will make the two figures slightly off when reported by national statistical agencies.

• Gross Domestic Product

  • The production approach is also known as the Net Product or Value Added method.
  • For measuring gross output of domestic product, economic activities (i.e. industries) are classified into various sectors.
  • However, in practice, measurement errors will make the two figures slightly off when reported by national statistical agencies.
  • "National Income and Expenditure Accounts" divide incomes into five categories:
  • Depreciation (or capital consumption allowance) is added to get from net domestic product to gross domestic product.

• Calculating GDP

  • Gross domestic product is one method of understanding a country's income and allows for comparison to other countries .
  • The income approach adds up the factor incomes to the factors of production in the society.
  • GDP = National Income (NY) + Indirect Business Taxes (IBT) + Capital Consumption Allowance and Depreciation (CCA) + Net Factor Payments to the rest of the world (NFP)
  • The output approach is also called "net product" or "value added" method.
  • GDP at factor cost plus indirect taxes less subsidies on products is GDP at producer price.

• Cost of Goods Sold and Gross Profit

  • Gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service.
  • In accounting, gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service before deducting overhead, payroll, taxation, and interest payments.
  • Explain the difference between cost of goods sold and gross profit

• Productivity

  • In order to measure the productivity of a nation or an industry, it is necessary to operationalize the same concept of productivity as in a production unit or a company.
  • There are different measures of national productivity, and the choice between them depends on the purpose of the productivity measurement and/or data availability.
  • One of the most widely used measures of productivity is Gross Domestic Product (GDP) per hour worked.
  • Labor productivity is equal to the ratio between a volume measure of output (gross domestic product or gross value added) and a measure of input use (the total number of hours worked or total employment).
  • Explain how productivity is modeled on the company and national level, and how productivity is driven

• Profit Margin

  • Recall that gross profit is simply the revenue minus the cost of goods sold (COGS).
  • Net profit is the gross profit minus all other expenses.
  • The gross profit margin calculation uses gross profit and the net profit margin calculation uses net profit .
  • Companies need to have a positive profit margin in order to earn income, although having a negative profit margin may be advantageous in some instances (e.g. intentionally selling a new product below cost in order to gain market share).
  • The percentage of net profit (gross profit minus all other expenses) earned on a company's sales.