GDP, GNP,NNP.

Real vs. Nominal GDP: “ Deflating” GDP By a Price Index.
  There are two types of GDP:
     Real GDP
     Nominal GDP
  
Real GDP: Real GDP means the GDP at constant market price. We can measure the real GDP for a particular year using the constant market price of the year.
  We can also calculate the real GDP by dividing nominal GDP with the GDP deflator.

 Example: A country produces 1000 bushels of corn in year 1 and 1010 bushels in year 2. The price of bushels is TK 1 in year1 and TK2 in year 2.
  We use year1 as the base year, or the year in which we measure prices. We set the price index as P1= 1 in the first year and P2= 2 in the 2nd year.
  So, Real GDP= Nominal GDP/ GDP deflator (Price Index)
  Hence, Real GDP for year one is = 1000/1TK=1000TK
  And for year two is = 2020/2TK=1010TK

Nominal GDP: ( or GDP at current prices)
Nominal GDP is the total money value of final goods and services produced in a given year; where the values are expressed in terms of the market prices of each year.
Nominal GDP is calculating using changing prices.
  Nominal GDP = summation Pt × Qt
  Nominal GDP for year 1 is 1000×1= 1000TK
  and for year2 = 1010×2=2020TK.
Real GDP removes price changes from nominal GDP and calculates GDP in terms of quantities of goods and services.

GDP Deflator  
GDP deflator is the ratio of nominal GDP to real GDP .By dividing Nominal GDP with real GDP, we get the GDP deflator.
  GDP deflator=Nominal GDP/Real GDP
Example; Nominal GDP of a country in year 1929 is 104 billion taka and in year 1933 is 56 billion taka .
  Real GDP in year 1929 is 104 billion taka and year 1933 is 73 billion taka .
So, GDP deflator for year 1929 is =104\104=1
  And for year 1933 is 56\73=0.77
The GDP deflator is an index of price changes for goods and services included in GDP.The deflator reflects changes in the price of goods and services purchased by consumers; business and government. The GDP deflator is found by dividing current GDP BY constant GDP.

Gross National Product (GNP):
Gross national product is defined as the total market value of all final goods and services produced in a year. It is a measure of the current output of economic activity in the country. Two things must be noted in regard to gross national product;
It measures the market value of the annual output. In other words GNP is a monetary measure.
For calculating gross national product accurately, all goods and services produced in any given year must be counted once, but not more than once.






Personal Income:
  Personal income is the sum of all incomes received by an individual or a household during a given year. The income derived from six sources-
  1. Wages 2.rent 3.Interest 4.propriertor income 5.corporate profits 6.Transfer payment from the government.
  Personal Income= National Income – Social security contributions – Corporate income Taxes – Undistributed corporate profits + Transfer payments.

Gross National Product (GNP):
GNP=C+I+G+(X-M)
C=Consumption
I=Investment
G=Government expenditure
X=Export
M=Import.

NET NATIONAL PRODUCTION:
The consumption of fixed capital or fall in value of capital due to wear and tear is called deprecation. When charges for deprecation are deducted from the gross national product we get the net national product. It means the market value of all final goods and services after providing for deprecation. Therefore it is called,” national income at market prices.”
Net National Product = Gross National Product – Deprecation.


Disposable Income:
  To get DI we calculate market income and transfer incomes received by household and subtract personal taxes.
  DI= Market income + Transfer income – Personal taxes.
  Disposable income is divided between:
Consumption expenditure
Personal savings.
  Examples: If a person earns 2,000 TK in a month and gives 200 TK as income tax. He gets 500TK as transfer payment from government.
So, the disposable income of the man
= (2000 – 200 + 500) TK= 2300 TK.

Derivation of Disposable income From GDP:
  Disposable income = Personal Income – Personal taxes
  Disposable Income can either be consumed or saved, therefore,
  Disposable Income = Consumption + Savings.
  Transfer Payment: Transfer payment are government payments to individuals that are not made in exchanging for goods or services supplied.
  Examples: Unemployment insurance, disability payments, donations etc.



                                                                     GOODBYE