oRefers to the “market value
of all the final products
produced by the resources of
the economy during a specified
period of time.”

oGoods and services which enter
into the channel of trade and
commerce.
oProducts which are produced and
consumed by the producers.
oImputed value on rentals.

oOnly those goods and services produced
during a given period of time are
included.
oThe emphasis given on “final product”
is merely an attempt to avoid
- a problem that makes the
determination of the gross national
product very difficult.

oNational income in less developed
countries is understated.
-Many products which have been
produced and consumed are
excluded.

oInadequacy and inaccuracy of statistics.
Data gathering and analysis encounter
several problems such as obtaining the
real counts of the products, the real
value of the products and other
statistical errors. Others just make
estimates of the present status.

oGNP only measures the
number of goods and services
but not the quality of goods
and services.

oIt does not reflect the distribution of income
among the members of the society.
Income of the rich and the poor are combined
to come up with an average per capita
income. (PCI). Per capita income is income
per head.
The formula is:

oComprised of final goods and services
produced within national boundaries.
oThe GDP is a tool that measures the
value of all locally-produced foods and
services at market price.
oThe GDP does not include the earnings
of Filipino factors abroad. These are
parts of GNP.

oThe difference between GDP and GNP is called
It
regards the earnings of banking system as
inflows and repatriation to foreign factors of
production as outflows.
oNFIA is added to GDP to arrive at GNP. A
small formula of getting the GNP with the use
of GDP is:

Is the total value of final goods and services
produced during the year at prices prevailing
during that year. It is a value using current
prices.
The formula is:
Where:
Current Price
Current Volume of Goods and Services

oAt current price, GNP could not be
exactly determined. An increase in prices
of goods and services will automatically
increase the GNP even If there is no
actual increase in the volume of
production.
oIf GNP is really made to measure the
market value of total production, the
effect of price changes must be eliminated
so as to show GNP values which reflect
only changes in quantity.

oIs a measurement using a base or
constant price. This method means
expressing GNP for several years at
prices of a single year.
oIn real GNP, the effect of price
changes is eliminated so as to show
GNP values which reflect only changes
in quantity.

oReal GNP is computed from current GNP
using a price coefficient known as the
A price index is
needed to divide the GNP at current prices
in order to re express it at constant peso
terms. The price index must reflect well
the average increase of prices of all the
goods and services using the prices of a
given year as the point of comparison.

oThe formula for Real GNP is:
oTo get the Pure No. index, the formula
is:

Year Current Value
2014 P1,250,000.00
2015 P2,025,976.00
2016 P2,473,684.00

Year
Value of
Current Prices
Price Index
Pure No.
Index
Value at
Constant
Prices
2014 P1,250,000.00 100 1.0 P1,250,000.00
2015 P2,025,976.00 102.86 1.03 P3,939,288.35
2016 P2,473,684 107.43 1.07 P2,302,600.76