How do you find nnp

GNP is the value of all final goods and services produced by the residents of a country in a financial year i. While Calculating GNP, income of foreigners in a country is excluded but income of people who are living outside of that country is included. Inflation means Expansion of money or increase in supply of money in the economy. Actual meaning of inflation is increase in money supply faster than the growth in real national income.

In inflation money supply increases faster than the demand of money in the market, so money loses its value due to oversupply of money and this causes rise in price. Besides GDP, there are several different but closely related ways of measuring the size of the economy. We mentioned above that GDP can be thought of as total production and as total purchases.

It can also be thought of as total income since anything produced and sold produces income. GNP adds what is produced by domestic businesses and labor abroad, and subtracts out any payments sent home to other countries by foreign labor and businesses located in the United States.

For small nations, which may have a substantial share of their population working abroad and sending money back home, the difference can be substantial. Net national product NNP is calculated by taking GNP and then subtracting the value of how much physical capital is worn out, or reduced in value because of aging, over the course of a year. Think of it this way: If the net national product seems to be shrinking, entrepreneurs may want to consider diving into some recession-proof industries like collection agencies or auto repair the fewer people buying new cars, the greater a need for maintenance on older cars.

If the net national product is rising, they may wish to focus on consumer-led industries like retail sales and luxury travel. The net national product definition needs some context. A less complicated way to think about the net national product is to consider it a net national income. An important thing to know about the net national product is that it doesn't exclude foreign-made products.

It includes both goods and services that are produced domestically and overseas, which is a huge caveat when you look at countries like the United States that do a great deal of manufacturing in places like China. The net national product definition is slightly different from that of both the gross national product and the more often talked about gross domestic product.

Instead, the gross national product works better. In life, things depreciate and we need to spend money to keep production standards high.