there are two approaches to measuring a country's macroeconomic activity, which are Gross Domestic Product, and National Income. What do each of these approaches measure? List at least one advantage and disadvantage of each approach.
Gross Domestic Product:
When the products and services manufactured or produced into an economy or country are converted into monetary value then this monetary value is known as the gross domestic product.
Answer and Explanation:
The GDP or the gross domestic production computes the overall products and services manufactured in the national border at a given duration of time. It determines all the goods and services as long as they are manufactured inside the national boundary.
The national income is GDP + total earnings earned by the nation across the globe - total earnings achieved by the foreign national in the national boundary. It computes the income earned by countries across the globe.
A benefit of both will be:
GDP deals with all the components of manufacturing in the country and it is commonly accepted across the globe, so it can easily be used for comparison as well.
GNP determines how profitable the nationals are in the globe and how much the national capability in the globe is.
One disadvantage of both:
GDP neglects the impact of economic growth on the environment.
GNP can be inaccurate as it also consists of the Data which are not at all in relation to national manufacturing.
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Learn more about this topic:
from Economics 102: MacroeconomicsChapter 5 / Lesson 7