Listening to the speeches of politicians or reading economicarticles on the causes of the endless problems of our country, we often hear about such an indicator as gross national product. This, as 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). Interestingly, even 20–25 years ago, the gross national product (GNP) was considered the most important indicator, which shows what phase of the cycle the economy is in, so it certainly doesn’t hurt you to get to know it better.
Gross national product is monetaryexpression of the entire set of products released during the year in the territory of the given country Unlike the gross domestic product, it does not take into account whether it was released 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 cost of which is expressed in current market prices. This is done in order to avoid recalculation, as well as confusion.
Gross national product ismacroeconomic indicator, which directly affects the exchange rate of the country. And this is a logical explanation. Just imagine that the GNP of the state in question has increased. What does this mean? First, probably, industrial production in the state has increased, which is connected either with an increase in its efficiency or with its expansion. Secondly, most likely, the volume of foreign investment has also increased. Thirdly, the export rate has increased. All of 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 will grow steadily for several years?
It turns out that in this case we will encounter suchconcept like inflation. In order to prevent the national currency from falling, the state will have to raise interest rates, which will reduce the amount of money in circulation.
It is also important to understand that VP is real andnominal. The real one is calculated in the prices of the period that was chosen as the base one, which allows you to get a really realistic picture of whether the well-being of the country's population really grows or whether money is simply depreciating.
The calculation of the gross national product maybe carried out using various methods. According to economists, this can be done in three main ways. First, you can add up all the income for the year. The amount of wages, interest, rent payments, depreciation and indirect taxes is taken into account in the method of calculating the GNP on income. Secondly, it is possible to calculate how much money will be needed to purchase all the products produced during the year. Thirdly, GNP can be calculated on the basis of produced value added. Some economists believe that the latter is the most reliable option.
