## GDP and GNP

Gross Domestic Product (GDP) is the value of final goods and services produced within a country in a given period. It is the total of all activities in a country, regardless of who owns the productive asset.

Gross National Product (GNP/GNI) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country.

Unlike Gross Domestic Product (GDP), which defines production based on the geographical location of production, GNP allocates production based on ownership. It is the total income that is earned by a country's factors of production regardless of where the assets are located.

Thus GNP=GDP + (incomes earned from assets abroad-Incomes paid to foreign assets operating domestically)

source: wikipedia

## Nominal GDP & Real GDP

The raw GDP figures are called the Nominal or Current GDP. When comparing GDP figures from one year to another, it is desirable to compensate for changes in the value of money – i.e., for the effects of inflation or deflation. The GDP adjusted for changes in money-value in this way is called the Real GDP.

For example, suppose a country's GDP in 2000 was \$100 million and its GDP in 2010 was \$300 million; but suppose that inflation had halved the value of its currency over that period. To meaningfully compare its 2010 GDP to its 2000 GDP we could multiply the 2010 GDP by one-half, to make it relative to 2000 as a base year.

The result would be that the 2010 GDP equals \$300 million × one-half = \$150 million, in 2000 monetary terms. We would see that the country's GDP had, realistically, increased 50 percent over that period, not 200 percent, as it might appear from the raw GDP data.

## GDP Deflator

 GDP Deflator= Nominal GDP X 100 Real GDP

## GDP per capita

GDP per capita is the value of all final goods and services produced within a country in a given year divided by the average population for the same year.

Comparisons of national wealth are also frequently made on the basis of nominal GDP, which does not reflect differences in the cost of living in different countries. However, GDP per capita is often considered an indicator of a country's standard of living and often used as an economic development indicator.

source: wikipedia

## Watch a Video - Real GDP

### New Youtube Channel - ThinkIGCSE

Hi Everyone, I have launched a new YouTube channel with more than a 100 videos on  Economics and Business Studies, tailored specifically for IGCSE and A Level and IBDP students.

#### WHO'S ONLINE

We have 179 guests and no members online

### IMPORTANT MESSAGE

Quizzes and worksheets on this website have been developed in Flash format. Flash is no more supported by browsers. Therefore, you might see blank pages on some instances. Install Flash player plugin for Chrome from Chrome Web Store. Click here

Similarly, for other web browsers you will have to activate the relevant flash player plugins.

Save