GDP (Gross Domestic Product): GDP represents the total monetary value of all final goods and services produced within a country's borders during a specific time period. It measures the economic output of a country and is often used to gauge its overall economic health. The spending approach and the income approach are two methods for calculating GDP.
Formula
for GDP (expenditure approach): GDP = Consumption (C) + Investment (I) +
Government Spending (G) + Net Exports (NX)
Example:
Let's say Pakistan produced goods wort Rs. 100 million, investment was Rs. 30
million, government spending was Rs. 20 million, and net exports were Rs. 10 million.
The GDP of Country A would be Rs. 100 million + Rs. 30 million + Rs. 20 million
+ Rs 10 million = Rs. 160 million.
GNP
(Gross National Product): GNP is the total monetary worth of all finished products and services
generated by all of a nation's residents over a certain time period, regardless
of where they were located. GNP takes into account the production of a
country's residents both domestically and abroad.
Formula
for GNP: GNP = GDP + Net income from abroad
Example:
Suppose Pakistan has a GDP of Rs. 200 million, and its citizens earned Rs. 30 million
from investments and employment abroad while foreigners earned Rs. 10 million
from investments and employment within Country. The GNP of Pakistan would be Rs.
200 Million + (Rs. 30 Million - Rs. 10 million) = Rs. 220 million.
NP (Net
Product): NP
represents the value of final goods and services produced within a country
after deducting the depreciation of capital goods. It provides a measure of the
net increase in the country's wealth during a specific time period.
Formula
for NP: NP = GDP - Depreciation
Example: If
the depreciation of capital goods in Pakistan is Rs. 40 million and its GDP is Rs.
300 million, then the NP of Pakistan would be Rs. 300 million - Rs. 40 million
= Rs. 260 million.
NNP (Net
National Product): When
depreciation is taken into account, NNP is the value of the final commodities
and services generated by a nation's population. NNP represents the overall net
gain in a nation's wealth.
Formula
for NNP: NNP = GNP - Depreciation
Example: If
the GNP of Country D is Rs. 500 million and the depreciation of capital goods
is Rs. 50 million, then the NNP of Country D would be Rs. 500 million - Rs. 50 million
= Rs. 450 million.
PI
(Personal Income):
PI represents the total income received by individuals from all sources within
a country, including wages, salaries, rents, profits, and transfer payments
like pensions and social benefits. It measures the income earned by individuals
before accounting for taxes and other deductions.
Example: If
the total income earned by individuals in Country E is Rs. 100 million from
wages, Rs. 20 million from rents, and Rs. 30 million from profits, the PI of
Country E would be Rs. 100 million + Rs. 20 million + Rs. 30 million = Rs. 150 million.
Per
Capita Income: Per Capita
Income is calculated by dividing the total income of a country or region by its
population. It gives an average estimate of income per person and is often used
to measure the standard of living or economic well-being.
Formula
for Per Capita Income: Per Capita Income = Total Income / Population
Example: If
the total income of Country is Rs. 400 million and its population is 50
million, the Per Capita Income of Country would be Rs. 400 million / 50
million = Rs. 8,000.
What does
GDP stand for?
a) Gross
Domestic Product
b) Gross
National Product
c) Net
Product
d) Net
National Product
Correct
Answer: a) Gross Domestic Product
GNP
represents the total monetary value of:
a) Final
goods and services produced within a country
b) Final
goods and services produced by the citizens of a country, regardless of their
location c) Goods and services produced within a country after deducting
depreciation
d) Goods and
services produced by the citizens of a country, accounting for depreciation
Correct
Answer: b) Final goods and services produced by the citizens of a country, regardless
of their location
NP (Net
Product) is calculated by:
a)
Subtracting depreciation from GDP
b) Adding
net income from abroad to GDP
c)
Subtracting depreciation from GNP
d) Adding
net income from abroad to GNP
Correct
Answer: a) Subtracting depreciation from GDP
NNP (Net
National Product) represents:
a) The total
income received by individuals from all sources within a country
b) The value
of final goods and services produced within a country after deducting depreciation
c) The value
of final goods and services produced by the citizens of a country, accounting
for depreciation
d) The total
monetary value of all final goods and services produced by the citizens of a
country, regardless of their location
Correct
Answer: c) The value of final goods and services produced by the citizens of a
country, accounting for depreciation
PI (Personal
Income) includes:
a) The total
income received by individuals from all sources within a country
b) The value
of final goods and services produced within a country after deducting
depreciation
c) The value
of final goods and services produced by the citizens of a country, accounting
for depreciation
d) The total
monetary value of all final goods and services produced by the citizens of a
country, regardless of their location
Correct
Answer: a) The total income received by individuals from all sources within a
country
Per Capita
Income is calculated by:
a) Dividing
GDP by the population
b) Dividing
GNP by the population
c) Dividing
NNP by the population
d) Dividing
PI by the population
Correct
Answer: a) Dividing GDP by the population
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