Q.Define Gross Domestic Product (GDP) and Gross National Product (GNP). State the formula that connects them.

GDP is the value of final output produced within a country's own borders; GNP extends this to whatever a country's own residents produce, wherever in the world.

Gross Domestic Product (GDP) is the money value of all final goods and services produced within the domestic territory of a country during one accounting year, by both residents and non-residents operating there.

Gross National Product (GNP) is the money value of all final goods and services produced by the normal residents of a country during one year, regardless of whether the production takes place inside the country or abroad.

The two aggregates differ only by Net Factor Income from Abroad (NFIA) — the income a country's own residents earn abroad, minus the income non-residents earn within the country:

If a country's residents earn more from abroad than foreigners earn within it (NFIA positive), GNP exceeds GDP; if the reverse holds (NFIA negative), GNP falls short of GDP; and if NFIA is zero, GDP and GNP are identical.