There are many kinds of indicators of economic well-being of society. The primary measure in the preparation of the SNA is the gross national product, or - briefly - GNP.
Gross national product (GNP) - is the total market value of the total final output of goods and services in the economy for the year.
With the GNP measure all current products, whether sold or not. On the one hand, it has to be money (cost) index, because we need to compare the heterogeneous composition of the set of goods and services produced in different years. On the other hand, it shows the volume of production, therefore acts as a natural indicator.
Gross national product can give a real idea of the welfare of the society, however, we should point out the shortcomings GNP:
1) There are a number of non-market (unrecorded) operations - repairing your own home, work housewives.
2) Does not reflect the quality characteristics of products.
3) The emergence of free time.
4) Do not reflect changes in the composition and distribution of products.
5) GDP growth accompanied by unwanted expenses for environmental protection and is not deducted from GDP, thus unduly inflating it.
6) The distortion of GNP affects the shadow economy.
Gross domestic product (GDP) - is monetary value of all final goods produced and services in the economy for the year in that country.
GNP and GDP indicative of the results in two areas of the economy: the material production and services. However, they have differences: GDP - is the total cost of the entire volume of products and services in both sectors of the national economy, regardless of the location of national companies (at home or abroad).
GDP is calculated on the so-called territorial. Thus, GNP differs from GDP in the amount of so-called factor income (income employees, rental income, interest on loans, corporate profits) from the resources of the country abroad, net of similar income taken from the country of foreigners.
Net National Product (NNP) is the gross national product, net of depreciation. This indicator shows the productive capacity of the economy, because it includes only the net investment and does not include the capital stock, which was used in the current year. Therefore, to get NNP should deduct depreciation of GDP:
National Income (NI) - is a newly established annual cost, which has added production in a given year to the welfare of society. With his calculation does not include the amount of depreciation, indirect taxes and government subsidies. LP - a "Wages income" society (wages, income, profits).
Personal income (PI) is the total income received by the owners of economic resources.
Disposable income (DI) - the income, which is in the personal possession. It is smaller than the personal income tax on the value of the individual, who must pay the owners of economic resources in the form of the (primarily income) taxes.
Methods of measuring GNP
GNP has two sides of expenditure and revenue. There are three different approaches to measuring GDP.
The first means look at GDP as the sum of all costs required to buy in the market the entire volume of production. This is - an approach to the definition of GDP by expenditure. [4, p.135]. Another approach is to look at the GDP in terms of income received or generated in the production of GDP. This is - an approach to the definition of GNP for income, or income.
A deeper analysis of these two approaches can reveal the essence, to which they both come down: GDP can be defined either by adding up all the costs for the purchase of the total produced in the year of production, or by the addition of income derived from the production of the total output of the year.
The calculation of GNP expenditure
GNP = C + I + G + X,
where:
C -personal consumption expenditures of households on durable consumer goods, goods for current consumption, and consumer spending on services.
I – gross private domestic investment, or "investment spending." They include three components: 1) the purchase of entrepreneurs machinery, equipment and tools, 2) all construction (commercial and residential construction), 3) investments in stocks.
G - government procurement, which include public consumption and public investment.
X – net exports. It represents the difference between income from exports and expenditure on imports of the country and meets the trade balance.
