GDP and GNP?

Question

will GDP greater the GNP??

will GDP at market price must be greater then GNP at factor cost? w

wt is GDP at market price?

wt is GDP at factor cost?

Answer 1

最愛解答

Q1:

GNP = GDP + ( Net income from abroad - Net income paid abroad )

or

GNP = GDP + NFIA

Then

when NFIA is +VE, GNP > GDP,

when NFIA is -VE, GNP < GDP,

when NFIA is 0, GNP = GDP.

Hence GDP > GNP when NFIA is -VE.

Q2

GDP at factor cost = GDP at market price + Subsidies - Indirect taxes

Then

when the net of subsidies less indirect taxes > 0, GDP at f.c. > GDP at m.p.,

when the net of subsidies less indirect taxes < 0, GDP at f.c. < GDP at m.p.,

when the net of subsidies less indirect taxes = 0, GDP at f.c. = GDP at m.p.

Hence GDP at m.p. may not be greater than GDP at f.c.

Q3

GDP at m.p. is the same as the GDP measured by the expenditure approach.

Q4

GDP at f.c. is the total value - added from production after substracting indirect business taxes from and adding subsidies to total market value of output.

[Q3 and Q4 in fact summarize the formula

GDP at factor cost = GDP at market price + Subsidies - Indirect taxes]

資料來源： My Econ Knowledge