Meaning, Purpose and Limitations

GNP (Gross National

Product)

GNP
Market

value of all final products

produced by the resources of the
economy during a specified period of
time.

Three Limitations
1st

Excludes products not produced by the

resources of the economy as imports.

2nd

Definition only includes those products that

can no longer be use for higher stages of
production and therefore, have reached the
highest level of transformation using the
economys resources.
Products can be considered final once they follow
directly from the producing units to consumption,
the government and the rest of the world.

Cont...
3rd

Limitation is time and the

definition eliminates from the
aforementioned those not produced
by the economy within the period of
time accounted.

Purpose
GNP

reflects the value of the economys

production since it also includes the
value of products from the lower stages
of production.
GNP is a formal tool which cannot
picture the informal and hence,
undeclared activities in the economy.
Economic activities of a cigarette vendor
is undeclared and unrecorded.
underground economy.