The Pros And Cons Of GNP And GDP

GDP (gross domestic product) is the statistic of national income. The Great Depression and World War II rose the idea of GDP. It started when a group of professionals were called into a congressional hearing to answer basic questions about the economy. The Professionals were supposed to be able to answer the questions, as they were experts on the situation. Unfortunately they couldn’t answer any of the questions, which led the department to hand the task to a young economist named Simon Kuznets. Simon came up with the concept of the GDP and eventually someone else would come along and create the GNP. The GNP (Gross National Product) was put in place to be the main source for the nation’s economic policy. Simon told them that they shouldn’t use the GNP as their main indicator because it wasn’t accurate. Now GNP and GDP are different, GNP is the market value of all the products and services that are produced in one year by labor and property supplied by the …show more content…
GDP doesn’t count for anything sold illegitimate, such as drugs. It also does not measure anything that is produced or consumed in your own home, like the fruits or vegetables you grow in your yard. To sum it up if it can’t or does not enter the market place it will not be measured in the GDP, because it is too difficult to keep track of something that hasn’t been through the market. The problem with the way GDP is set up is that GDP can only be added up nothing can be subtracted. So when the value of a good goes down GDP will count the number it was originally at and not the number it dropped to. That being said, that number will actually be counted twice which makes the information that you’re receiving inaccurate. GDP was constructed so that it could only account for finished goods and services. GDP doesn’t account for the cost and benefits, or anything that doesn’t go through the market, which makes it