Difference Between GDP, GNP And GNI

For the first time, I understand the difference between GDP, GNP, and GNI. I haven 't taken macroeconomics at IU, and my economics teacher in high school often put episodes of The Office on instead of teaching. GNI is the broadest measure of economic activity, because it sums up all American businesses, foreign and domestic. GDP accounts for the total value of goods and services made by workers within a specific country. A Volkswagen plant in South Carolina would count for US GDP, but not US GNI. GNP is similar to GDP, but includes income from overseas investments. It’s important to look at GDP growth, along with the actual GDP when assessing a country’s economy. Understanding these three measurements of a country 's economy will prove useful …show more content…
Because of this visibility, they are very politically important. When added together, they make up the misery index up, an economic indicator for a country. We’ve seen cases of rapid expansion in the past. Countries like post-WW2 Germany had a period of prices doubling every two days, and a December 1923 exchange rate of 4,200,000,000,000 Marks to 1 US dollar. Rapid deflation could potential be much scarier, mainly because we have less instruments available to combat deflation. Tools for inflation include controlling the money supply, setting exchange rates, and changing the interest rates. In the recent years, we’ve seen interest rate manipulation become a popular and public way to control inflation. Understanding these concepts, their importance, and historical examples will give me insight when predicting the futures of markets and …show more content…
In an ideal world, all trade would be free trade because the market fairly and effectively creates prices. Unfortunately, completely free trade has never been accomplished, even though monitoring trade is expensive, create inefficiencies, encourages lobbying, and damages competitiveness. In order to manipulate the market, governments has numerous tools at their disposal. Tariffs force an international seller to pay a tax on exported goods, which are imposed on most countries. Subsidies decrease the cost to research, incentivizing people to develop certain technologies, like solar energy. An embargo is a ban on all trade with a country. America has had a long standing embargo on trade with Cuba. Mainly caused by political controversy, an embargo can drastically hurt a country’s future economic growth. Each of these government tools to manipulate the market are crucial to understand in a global business setting. They are the rules that govern international