Gross Domestic Product (GDP)

and

Gross National Product (GNP)

What you will learn ...

Gross domestic product (GDP)

Take this challenge

Gross national product (GNP)

Why might GDP and GNP differ?

Gross domestic product

Gross domestic product (GDP) is a measure of the total monetary value of _______________________ produced by all ________________________ of a territory or an economy over a specified period of time, usually a year or a quarter.

final goods and servicesresident producing units

xamples of Hong Kong’s resident producing units:

Gross national product

Gross national product (GNP) measures the ________________________________ of an economy from engaging in __________________.total income earned by residents economic activities

Key Points Parade

residents

Why might GDP and GNP differ?

GNP may not be equal to GDP because:

1. our resident producing units (RPUs) may use factor services provided by _____________.non-residents

2. our residents may provide factor services _______.abroad

Example

Example

Why might GDP and GNP differ?

We can find GNP from GDP:

GNP = GDP + (_____________________________)factor income from abroad -

factor income paid abroad

net factor income from abroad

Take this challenge 1

Q Paul, a Hong Kong resident, receives dividends from a UK company. How does this affect Hong Kong’s GDP and GNP?

Hong Kong’s GDP will be / not be affected.

Hong Kong’s GNP will be / not be affected.

The dividends are Hong Kong’s factor income from / paid abroad, so Hong Kong’s GNP will increase / decrease.

Take this challenge 2

A Filipino maid has worked in Hong Kong for two years. Is her salary included in Hong Kong’s GDP or GNP?

Q

She is / is not a Hong Kong resident.

Her salary is / is not included in Hong Kong’s GDP.

Her salary is / is not included in Hong Kong’s GNP.

Take this challenge 3

In what situation will GDP be larger than GNP?Q

GNP = GDP + ( ) factor income

from abroad - factor income paid abroad

If factor income from abroad is larger / smaller than the factor income paid abroad, GNP will be smaller than GDP.