GDP: Gross Domestic Product at factor cost/market prices is the total output produced by the factors of production in the domestic economy, irrespective of whether the factors are owned by Irish nationals or foreigners, as measured by payments to factors of production/current market prices
GNP: Gross National Product at factor cost / market prices is the total output produced (value of goods and services) by Irish owned factors of production in Ireland and elsewhere. It is a measure of the income accruing to a country’s residents.
GNI: Gross national Income comprises domestic and foreign income earned by the residency population of a country. GNDI: Gross National disposable income may be derived by adding national income to net current transfers.
GNDI: Gross National disposable income may be derived by adding national income to net current transfers
Analyse which measure is a more accurate indicator of Ireland’s economic performance and economic welfare
GNP vs GDP
GDP is the value of all goods and services produced in this country. GNP is GDP +/- net factor income with the rest of the world. GNP is always less than GDP due to repatriated profits
GDP is a better guide to the level of economic activity in the country while GNP is a better guide to the standard of living in the country
Explain the reasons why GDP in Ireland at present is larger than GNP
1. Repatriation of profits by foreign multinationals in Ireland.
2. Repayment of interest on the foreign element of our National Debt.
3. Remittances of immigrants in Ireland sent abroad.
Sample paper: Question 5
(a) Distinguish between Gross Domestic Product (GDP) and Gross National Income (GNI) as methods of calculating National Income.
(b) Which is a more accurate measure of measuring National Income, GDP or GNI?