Listening to the speeches of politicians or reading economic articles on the causes of the endless problems of our country, we often hear about such an indicator as gross national product. This, economists say, is an indicator of the state of the country's economy, which is only slightly inferior in accuracy to gross domestic product (GDP). It is interesting that 20–25 years ago, the gross national product (GNP) was considered the most important indicator that reflects what phase of the economy is in the cycle, so it would not hurt you to get to know it better.
Gross national product is a monetary expression of the entire aggregate of products released per year in the territory of a given country. Unlike gross domestic product, it does not take into account whether it was issued by residents or non-residents. Gross national product is an indicator that includes not only goods produced, but also services rendered and work performed. It is important to understand that only final products are taken into account, the value of which is expressed in current market prices. This is done so that there is no recounting, as well as confusion.
Gross national product is a macroeconomic indicator that is directly affected by the country's currency. And there is a logical explanation for this. Just imagine that the GNP of the state in question has increased. What does this mean? Firstly, it is likely that the state has increased
industrial production, which is associated either with an increase in its efficiency or with its expansion. Secondly, most likely, the volume of foreign investment has also increased. Third, the export rate has become larger. All these factors lead to an increase in demand for the national currency. But can a “product”, the demand for which is constantly growing, be cheap? The national currency is becoming stronger. But what will happen if the gross national product grows steadily over the course of several years?
It turns out that in this case we will come across a concept such as inflation. To prevent the depreciation of the national currency, the state will have to increase interest rates, which will reduce the amount of money in circulation.
It is also important to understand that EP is real and nominal. The real price is calculated in the prices of the period that was chosen as the base, which allows you to get a truly realistic picture of whether the welfare of the country's population is really growing, or money is simply depreciating.
The calculation of gross national product can be carried out using various methods. According to economists, there are three main ways to do this. Firstly, you can add up all the income for the year. The amount of salaries, interest, rental payments, depreciation and
indirect taxes is taken into account in the method of calculating GNP by income. Secondly, it is possible to calculate how much will be needed to purchase all products released per year. Third, GNP can be calculated on the basis of the
value added generated
. Some economists believe that the latter option is precisely the most reliable.