Measurement of GNP

Measurement of GNP

GNP stands for Gross national product i.e. summation value of all final goods and service produced during the year. GNP is measured at market price. GNP may be measured by three methods i.e. expenditure method, income method and product method.

1.    Expenditure Method

Under expenditure method total expenditure on good and serviced are added to calculate the GNP. The expenditure which is summed includes consumption expenditure, investment expenditure, government expenditure and net income (export) from abroad.

2.    Income Method

Under income method income of factor of product are summed up. Income of factor of production includes wages & salaries, rent income, interest income, dividend income, indirect taxes, depreciation.

3.    Product Method

Under this method all prices of final goods and services produced in the country is summed up. Only final goods should be included in the calculation & and good under production process should be excluded from calculation.