The gross national product is the sum total of all final goods and services produced by the people of one country in one year. The GNP is a flow concept. It can be calculated with either the expenditure approach or the income approach. The GNP excludes intermediate goods, second hand sales as well as financial transactions. The GNP is a money amount and must be adjusted for changes in the value of money.
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The goal of gross national product is to measure the physical activity of a nation by adding all the different types of productions: production of cars, production of computers, etc... But adding cars and computers does not make much sense. Therefore, the prices of these goods are summed. |
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