1. GDP vs. GNP
Sections

2. GDP – What is it? What does it stand for? Gross DOMESTIC Product
Domestic – in home
Refers to the value of all the final goods and services produced within a nation’s borders.
Goods made “in home”

3. GDP - Examples Examples of what is included in GDP:
An orange grown in Florida and exported to Canada
A sandwich from a Subway in Virginia
A new car sold in Tennessee
A teacher’s services at school (salary)
BMW plant in Michigan – German owned
Ford Plant in South Carolina – American owned

4. GDP - Examples Examples of what is NOT included in GDP: A used car
The bread before it’s used to make a Subway sandwich in Virginia
An American owned clothing factory in Tokyo
Drugs illegally grown in California
Medicines smuggled in from Europe

5. GDP – How is it determined?
C + I + G + (X – M) = GDP
ALL goods and services x Price = GDP
Ex: (1000 oranges x $0.50) + (20 BMWs x $75,000) + (500 microwaves x $60) + (100 teachers x $50,000) + etc… = GDP

6. Different Ways of Expressing GDP
INFLATION is a rise in the general level of prices.
Current GDP is NOT adjusted for inflation.
Real GDP is adjusted for inflation.
GDP per capita is the measurement of the output per person (it is NOT a measurement of income)
GDP / Population = Per capita GDP

7. GNP – What is it? What does it stand for? Gross NATIONAL Product
National – by citizens
Refers to the value of all the final goods and services produced by a nation’s citizens.
Goods made “by citizens”
Excludes goods + services produced w/ labor + property supplied by foreigners in the US.
GNP is used to measure income – not output.
Usually very close to a nation’s GDP.

8. GNP - Examples Examples of what is included in GNP:
An orange grown in Florida and exported to Canada
A sandwich from a Subway in Virginia
A new car sold in Tennessee
A teacher’s services at school (salary)
Ford Plant in Michigan – American owned
Chevrolet plant in Canada – American owned

9. GNP - Examples Examples of what is NOT included in GNP: A used car
The bread before it’s used to make a Subway sandwich in Virginia
An French owned clothing factory in New York
Drugs illegally grown in California
Medicines smuggled in from Europe by Americans

10. GNP – How is it determined?
GDP + payments from goods made outside the US by American owned businesses – payments to foreign countries from goods made inside the US by foreign owned businesses = GNP

11. Different Ways of Expressing GNP
INFLATION is a rise in the general level of prices.
Current GNP is NOT adjusted for inflation.
Real GNP is adjusted for inflation.
GNP per capita is a measurement of income per citizen
GNP / Population = Per capita GNP