Foreign trade, exports and imports, and goods and services. Now, these concepts are important as they affect the domestic product or GDP of the economy as a whole. However, in addition to GDP, there are several other very important macroeconomic identities that measure economic growth. These include the national product or GNP and the net national product or NNP.
Now, the GNP measures the total value of all final goods and services produced within a specific ** of time by a country’* residents and enterprises. While calculating GNP, economists deduct the income earned domestically by foreign individuals and companies and add the income earned by residents and companies working abroad.
NNP is the total value of all final goods and services produced by the factors of production of a country within a given specific time minus depreciation. In other words, NNP is GNP – depreciation. Now while calculating the NNP, economists take into consideration two very important factors—indirect taxes and subsidies.
