Distinguish between:
1) Gross national product and Gross domestic product
Basis
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Gross National Product(GNP)
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Gross Domestic Product(GDP)
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1. Definition
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GNP takes into account all the goods and services produced by the normal residents of a country both within the domestic territory as well as outside the country.
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GDP refers to the market value of all final goods and services produced within the domestic country during an accounting year inclusive of depreciation.
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2. Net factor Income from abroad
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It includes the net factor income from abroad.
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It excludes the net factor income from abroad.
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3. Formula
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GDP = Consumption + Investment + Government expenditure + (exports
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GNP = GDP + (R – P)
R = Net income inflow from assets abroad
P = (Net payment outflow to foreign assets).
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