Economics Gdp Questions
The difference between GDP and GNP deflator index lies in the variables they measure and the perspective they adopt.
Gross Domestic Product (GDP) is a measure of the total value of all final goods and services produced within a country's borders during a specific time period. It focuses on the economic activity that occurs within a country, regardless of whether the production is done by domestic or foreign entities. GDP reflects the overall economic performance of a country and is used to compare the economic growth rates between different countries.
On the other hand, the Gross National Product (GNP) deflator index measures the average price change of all goods and services produced by the residents of a country, regardless of their location. GNP takes into account the income earned by a country's residents, both domestically and abroad. It includes the value of goods and services produced by a country's citizens or companies operating abroad, while excluding the value of goods and services produced within the country by foreign entities.
In summary, GDP focuses on the value of goods and services produced within a country's borders, while GNP considers the income earned by a country's residents, regardless of their location. The GNP deflator index measures the average price change of goods and services produced by a country's residents, providing insights into the inflationary pressures faced by the country.