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THE

NATIONAL
PRODUCT
(GNP & GDP)
Objectives:
1. analyze the national
product (GNP and GDP)
as measurement of the
capacity of the economy

2. determine the different


approaches in the
computation of the
national productivity
1.
Have you ever
wondered why
other countries
are better off than
others?
Let us have a kick start activity,
‘Ito ang may yaman?’ in this activity, you will analyze
‘Mysterious Nations’ from
http://www.commonsenseeconomics.com/activities/EconFreedom
Mystery.pdf .
Based on statistics make an assessment which countries are rich
or poor
Process Questions:
•Which of these countries is/are poor? Rich?
•How did you decide on choosing which is rich and
poor?
•Which of the indicators are important in your
assessment of the wealth of the country?
•Are these indicators helpful in the development of
the economy? Explain
•Country A- •Country B-
Size: Three-tenths the Size- about the size of California
size of the United States Population- over 127 million
Population: About 40 Natural resources: Fish, no mineral
million(small for a nation resource
this Size)
Natural Resources: rich •Country C-
resources with fertile Size- twice the size of California
land, lead, zinc, tin, Population- large population of 128
copper, iron ore and oil million
Natural resources: Vast resources
including oil, tin, iron ore,
limestone, lead, zinc natural gas
•Country D-
Size- 1.8 times the size of the United States
Population- large population of 143 million
Natural resources: Vast resources with major deposits
of oil, natural gas , coal, many strategic minerals, vast
timber supplies

•Country E-
Size- 3.5 times bigger than
Washington, D. C.
Population- 4 million
Natural resources: fish,
deepwater port
Process Questions:
•Which of these countries is/are poor? Rich?
•How did you decide on choosing which is rich and
poor?
•Which of the indicators are important in your
assessment of the wealth of the country?
•Are these indicators helpful in the development of
the economy? Explain
Approaches to GNP
Measurement
1. Final Expenditure Approach
- The economic sectors like household, government,
business firms, and foreign market have their own
expenses, which are significant in measuring the GNP
The formula for measuring the GNP
using this approach is

GNP= G + P + B + (X-M) + NFIA + SD


For Example:

G 65 M pesos
P 173 M pesos
B 100 M pesos
M 10 M pesos
X 8 M pesos
NFIA 6 M pesos
SD 8 M pesos

Using the formula in measuring GNP at Final


Expenditure Approach the amount is P350 million
2. Factor Income Approach
- All the factor income are combined together, the result is
the NATIONAL INCOME (NI).
The formula for measuring the National
Income is

NI = CE + EI + CI + GI
For Example:

CE is P200 million
EI= P60 million
CI= P25 million
GI= P42 million

Then,

=200M + 60M + 25M +42M

=P327 million
To be able to measure the GNP, we will add the other
production expenses such as

1. Capital Consumption Allowance (CCA)


2. Indirect Business Taxes (IBT)

In general GNP can be measured with the use of the


formula:
GNP = NI + IBT + CCA

For example, if NI = P327 million, IBT = P8 million and P15


million for CCA,

Then GNP is equal to P350 million


3. Industry Origin Approach
- It is called the Value Added Approach where all the
contribution of each industry like agriculture, industry
and services are computed.
For example:

Agriculture: 110 million


Industry 113 million
Services 121 million
GDP 344 million

Add:
NFIA 6 million
GNP 350 million
What have you observed in the
results of GNP computation
using the three approaches?
KNOWLEDGE ON COMPUTATION
1. Compute the GNP growth based on the following data:

Gross National Product 2016 2017 2018


GNP at current prices 1,584,423 1,777,741 2,035,395
GNP at constant prices 342,937 375,026 394,787

A.What is growth rate of Nominal GNP from 2016 – 2017?


B.What is the growth rate of Real GNP from 2017 – 2018?
C.What is the growth rate of Nominal GNP from 2017-2018?
D.Give the growth rate of Nominal GNP from 2016-2018?
E.What is the growth rate of Real GNP from 2016-2017?
KNOWLEDGE ON COMPUTATION
2. Compute the GNP using the three approaches. Show your
computation.

X 20M Agriculture 120M


SD 3M IBT 12M
CE 60M GI 170M
NFIA 37M Industry 125M
P 154M CI 100M
CCA 10M G 88M
EI 50M Services 120M
B 124M M 24M