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Gross National Product (GNP)

GNP is measure most often used to determine how well the economy is faring; government and business alike ____(1)____. What does GNP include? If the retail prices of all the goods and services produced during the year were added up, the figure arrived at would be the gross national product for that year.

There are three different approaches to determining gross national product. All three will yield the same answer, because each is doing the same thing-measuring the total value of goods and services produced in the nation during the year. The first approach is totaling up the final market price of retail value of all production. This approach is easy to understand because it follows exactly the definition of GNP-the value of the nation's production, or product, _____(2)_____.

It is also possible to look at GNP from the point of view of goods and services bought rather than produced. This method is called the expenditures approach; it involves recording ____(3)____.

About two-thirds of all expenditures in the marketplace are for consumer goods and services and are made by families buying to satisfy their needs. Economists call these household purchases personal consumption expenditures.

The second largest buyer in the marketplace is government. Government at all level's accounts for over one-fifth of total expenditures.

Investment expenditures made by business account for most of the remaining purchases. Under this category are all purchases of capital goods (such as machinery and equipment), all construction (including homes), and the differences between inventories at the beginning of the year and at the end of the year.

The final and smallest item in the expenditure approach is net foreign investment. The total for this category is calculated by adding together all the expenditures ____(4)____ and subtracting from that amount the total of all U.S. purchases made abroad.

The third method of determining GNP is by analyzing income. Because the factors of production are responsible for the making of goods and services, it is possible to determine GNP by adding up all the payments made to those involved in this production. The sum of all wages, salaries, interest, rent, and profits, plus indirect business taxes and capital consumption, must be calculated. The resulting total represents the payment, or income, side of the goods and services produced. This figure is most frequently referred to _____(5)_____. However, the gross national income should equal the gross national product.

練習(xí)：

A before anything is subtracted from the total

B as gross national income because it deals with income instead of production

C use it to determine their future policies and plans

D based on foreign investments

E made by foreign countries in the United States

F who is buying the goods and services in the marketplace

Keys: CAFEB