Production By Permanent Residents Of A Country Is Calledproduct.A. Gross National B. Gross Domestic C. Net National D. Net Domestic
What is Product in Economics?
In economics, the term "product" refers to the goods and services produced by the permanent residents of a country. This concept is crucial in understanding the economic activities and output of a nation. The correct term for production by permanent residents of a country is Gross Domestic Product (GDP).
Gross Domestic Product (GDP)
GDP is the total value of all final goods and services produced within a country's borders over a specific time period, usually a year. It includes the value of all goods and services produced by citizens, as well as the value of goods and services produced by foreigners within the country's borders. GDP is a widely used indicator of a country's economic activity and growth.
Gross National Product (GNP) vs. Gross Domestic Product (GDP)
While GDP measures the total value of goods and services produced within a country's borders, Gross National Product (GNP) measures the total value of goods and services produced by a country's citizens, regardless of where they are produced. GNP includes the income earned by citizens from abroad, while GDP only includes the income earned within the country's borders.
Net National Product (NNP) and Net Domestic Product (NDP)
Net National Product (NNP) is the total value of goods and services produced by a country's citizens, minus depreciation (the decrease in value of capital assets). Net Domestic Product (NDP) is the total value of goods and services produced within a country's borders, minus depreciation.
Key Differences
| Gross Domestic Product (GDP) | Gross National Product (GNP) | Net National Product (NNP) | Net Domestic Product (NDP) | |
|---|---|---|---|---|
| Definition | Total value of goods and services produced within a country's borders | Total value of goods and services produced by a country's citizens | Total value of goods and services produced by a country's citizens, minus depreciation | Total value of goods and services produced within a country's borders, minus depreciation |
| Includes | Income earned within the country's borders | Income earned by citizens from abroad | Depreciation | Depreciation |
| Excludes | Income earned by citizens from abroad | Income earned within the country's borders | Income earned by citizens from abroad | Income earned by citizens from abroad |
Conclusion
In conclusion, the correct term for production by permanent residents of a country is Gross Domestic Product (GDP). While Gross National Product (GNP) measures the total value of goods and services produced by a country's citizens, Net National Product (NNP) and Net Domestic Product (NDP) measure the total value of goods and services produced, minus depreciation. Understanding the differences between these concepts is essential for analyzing a country's economic activity and growth.
References
- Bureau of Economic Analysis. (2022). Gross Domestic Product (GDP).
- International Monetary Fund. (2022). Gross National Product (GNP).
- World Bank. (2022). Net National Product (NNP) and Net Domestic Product (NDP).
Frequently Asked Questions
- Q: What is the difference between Gross Domestic Product (GDP) and Gross National Product (GNP)? A: GDP measures the total value of goods and services produced within a country's borders, while GNP measures the total value of goods and services produced by a country's citizens, regardless of where they are produced.
- Q: What is Net National Product (NNP)? A: NNP is the total value of goods and services produced by a country's citizens, minus depreciation.
- Q: What is Net Domestic Product (NDP)?
A: NDP is the total value of goods and services produced within a country's borders, minus depreciation.
Frequently Asked Questions (FAQs) on Gross Domestic Product (GDP) and Related Concepts =====================================================================================
Q: What is Gross Domestic Product (GDP)?
A: Gross Domestic Product (GDP) is the total value of all final goods and services produced within a country's borders over a specific time period, usually a year. It includes the value of all goods and services produced by citizens, as well as the value of goods and services produced by foreigners within the country's borders.
Q: What is the difference between Gross Domestic Product (GDP) and Gross National Product (GNP)?
A: GDP measures the total value of goods and services produced within a country's borders, while GNP measures the total value of goods and services produced by a country's citizens, regardless of where they are produced. In other words, GDP includes the income earned by citizens from abroad, while GNP only includes the income earned by citizens within the country's borders.
Q: What is Net National Product (NNP)?
A: Net National Product (NNP) is the total value of goods and services produced by a country's citizens, minus depreciation (the decrease in value of capital assets). NNP is a more accurate measure of a country's economic activity, as it takes into account the decrease in value of capital assets.
Q: What is Net Domestic Product (NDP)?
A: Net Domestic Product (NDP) is the total value of goods and services produced within a country's borders, minus depreciation. NDP is similar to NNP, but it only includes the value of goods and services produced within the country's borders.
Q: What is the difference between Gross Domestic Product (GDP) and Gross National Income (GNI)?
A: GDP measures the total value of goods and services produced within a country's borders, while GNI measures the total income earned by a country's citizens, regardless of where they are produced. In other words, GDP includes the value of goods and services produced within the country's borders, while GNI includes the income earned by citizens from abroad.
Q: What is the difference between Gross National Product (GNP) and Gross National Income (GNI)?
A: GNP measures the total value of goods and services produced by a country's citizens, regardless of where they are produced, while GNI measures the total income earned by a country's citizens, regardless of where they are produced. In other words, GNP includes the value of goods and services produced by citizens, while GNI includes the income earned by citizens.
Q: Why is Gross Domestic Product (GDP) an important indicator of a country's economic activity?
A: GDP is an important indicator of a country's economic activity because it measures the total value of goods and services produced within a country's borders. It provides a comprehensive picture of a country's economic activity, including the value of goods and services produced by citizens and foreigners.
Q: What are the limitations of Gross Domestic Product (GDP) as an indicator of a country's economic activity?
A: GDP has several limitations as an indicator of a country's economic activity. It does not take into account the distribution of income, the value of unpaid work, or the environmental impact of economic activity. Additionally, GDP can be influenced by factors such as inflation and changes in the value of the currency.
Q: What are some alternative indicators of a country's economic activity?
A: Some alternative indicators of a country's economic activity include:
- Gross National Income (GNI)
- Gross National Product (GNP)
- Net National Product (NNP)
- Net Domestic Product (NDP)
- Human Development Index (HDI)
- Environmental Sustainability Index (ESI)
Q: How can I calculate Gross Domestic Product (GDP)?
A: Calculating GDP requires data on the value of goods and services produced within a country's borders. This data can be obtained from various sources, including:
- National statistical agencies
- Central banks
- International organizations, such as the World Bank and the International Monetary Fund
To calculate GDP, you can use the following formula:
GDP = C + I + G + (X - M)
Where:
- C = Consumption
- I = Investment
- G = Government spending
- X = Exports
- M = Imports
Q: What are some common mistakes to avoid when calculating Gross Domestic Product (GDP)?
A: Some common mistakes to avoid when calculating GDP include:
- Failing to account for depreciation
- Failing to account for the value of unpaid work
- Failing to account for the environmental impact of economic activity
- Using incorrect data or methodology
- Failing to adjust for inflation or changes in the value of the currency
Conclusion
In conclusion, Gross Domestic Product (GDP) is an important indicator of a country's economic activity, but it has several limitations. Alternative indicators, such as Gross National Income (GNI) and Net National Product (NNP), can provide a more comprehensive picture of a country's economic activity. By understanding the differences between these concepts and avoiding common mistakes, you can calculate GDP accurately and make informed decisions about a country's economic activity.