GNP and prices

Gross National Product (GNP)

The total income earned by a nation's permanent residents, regardless of geographical location.

Difference between GDP and GNP

GNP includes income earned by citizens abroad, while GDP accounts for all economic activity within a country's borders.

What income does GNP exclude?

Income earned by foreign nationals within Ireland.

National Income

The total output of an economy, summing all types of income received by people, including wages, interest, rents, and profits.

Why is national income important?

It provides an understanding of economic activity and income distribution among citizens.

Adjusted Prices (Real)

Prices reflecting purchasing power after accounting for inflation.

Nominal Prices (Current)

Prices at the current time without adjustments for inflation.

Deflation

The process of adjusting for changes in prices, not to be confused with a decrease in price level.

Limitations of GDP and GNP

They do not adequately measure societal well-being, ignoring benefits of unpaid work and negative externalities.

Human Development Index (HDI)

An index composed of education, health, and income dimensions, providing a broader view of human development than GDP.

Subjective Well-Being (SWB)

A measure of satisfaction where respondents rate their happiness on a defined scale.

What is the Misery Index?

A measure of economic distress calculated by summing unemployment and inflation rates.

Correlation of Misery Index

Typically shows high correlation with other economic indicators, indicating varying economic conditions.