This is the basic social accounting measure of the total output or aggregate supply of goods and services. Gross national product is defined as the total market of all value of all the final goods and services produced in a year.
Two things must be noted in regard to gross national product. Firstly, it measures the market value of annual output. In other words GNP is a monetary measure of the total product in a year. There is no other way of adding up the different sorts of goods and services produced in a year except with the money prices, bit in order to know accurately the changes in physical output, the figures for gross national product is adjusted for price changes.
Secondly, for calculating gross national product accurately, all goods and services produced in any given year must be counted once, but not more than once. Most of the goods go through a series of production stages before reaching the market. As a result parts or companies of many goods are bought and sold many times. Hence, to avoid counting several times the parts of goods that are sold and resold, gross national product only includes the market value of final goods and ignores transactions involving intermediate goods.
Two things must be noted in regard to gross national product. Firstly, it measures the market value of annual output. In other words GNP is a monetary measure of the total product in a year. There is no other way of adding up the different sorts of goods and services produced in a year except with the money prices, bit in order to know accurately the changes in physical output, the figures for gross national product is adjusted for price changes.
Secondly, for calculating gross national product accurately, all goods and services produced in any given year must be counted once, but not more than once. Most of the goods go through a series of production stages before reaching the market. As a result parts or companies of many goods are bought and sold many times. Hence, to avoid counting several times the parts of goods that are sold and resold, gross national product only includes the market value of final goods and ignores transactions involving intermediate goods.
