Question

What is the difference between net national product (NNP) and gross domestic product (GDP) in terms of their calculation?

• A. NNP calculates only goods produced within the country, whereas GDP calculates both goods and services.
• B. GDP calculates goods and services produced by a country's citizens, whereas NNP considers domestic production as well as production of overseas citizens.
• C. The calculation of GDP covers a time period of one year, but NNP considers a time period of two years.
• D. GDP reflects the size of the economy, whereas NNP indicates the per person income in the country.

Answer 1

The correct option is B GDP calculates goods and services produced by a country's citizens, whereas NNP considers domestic production as well as production of overseas citizens.

Both economic indicators, i.e., GDP and NNP, calculate the money value of the goods and services produced by a country. In case of GDP, the value is calculated only for domestic productions. On the other hand, NNP also includes the value of goods and services produced by overseas citizens of the country.