Name of Student: DHRUV

Enrollment: 04280301714

BBA Semester II

{Evening Shift}

Batch: 2014 2017

Subject Code: BBA 104

 Subject: Business Economics-II

ACKNOWLEDGEMENT
I offer my sincere thanks and humble regard to Rukmini Devi Institute of advance studies
,GGSIP University , New Delhi for imparting us very valuable professional training in BBA.

I pay my sincere regard to Ms. Sonam Goel my project guide for giving me the cream of her
knowledge. I am thankful to her as he has been a constant source of advice, motivation and
inspiration. I am also thankful to her for giving his suggestion and encouragement throughout the
project work.

I take the opportunity to express my gratitude and thanks to our computer Lab staff and library
staff for providing me opportunity to utilize their resource for completion of the project.

I am also thankful to my family for constantly motivating me to complete the project and
providing me an environment which enhanced my knowledge.

DHRUV

BBA 2nd Evening

QUESTION
What is the difference between GDP & GNP? Which is the better measure on
Income?
DIFFERENCE BETWEEN GDP AND GNP
The GDP(Domestic) of a country is defined as the market value of all final goods and services
produced within a country in a given period of time whereas GNP(National) is the total value of
all final goods and services produced by a country's factors of production and sold on the market
in a given time period

Both are useful depends on the circumstances

GDP can measure economic growth via C+I +G+X-M and can be used to compare between
countries for economic rankings etc.

GNP per person is often used as a measure of a person's welfare. Countries with higher GNP
may score highly on other measures of welfare, such as life expectancy.

Comparison of GNP from one country to another may be distorted by movements in exchange
rates. Measuring national income at purchasing power parity may overcome this problem at the
risk of overvaluing basic goods and services

GNP and Gdp have limitations and therefore May not accurately depict the true value for
economic growth hence other indicators can come to complement the measure of nations
growth (+ve or -ve)...

Other means to measure a nation's growth is the material and non material standards of living,
inflation rates( hyperinflation implies the economy is retarding or stagnated eg.zimbawe ),
Misery index( Index = Unemployment rate + Inflation rate), Human Development Index (HDI),
Index of Sustainable Economic Welfare (ISEW) etc....

The government will set in place policies to achieve the macroeconomic goals which determines
the overall out of the nation and its economy , having sustained healthy economic growth, low
inflation rates / stable prices, low unemployment, BOP equilibrium...Maybe the government can
observe the trend of these indicators so as to determine the nation is expanding or not quarterly.

EXAMPLE

Assume that 2011 is the base year. Output is 2000 tons in 2011 and 2012 but prices are Rs 1000
and Rs 1500 per ton respectively in 2011 and 2012.

Nominal GDP in 2012 is 1500*2000=300000

Real GDP in 2011 is 1000*2000=200000

Real GDP is food indicator of income because it shows real increase in income over a period of
time. Real GDP neutralize the effect of change in price over period of time. Nominal GDP
become inflated due to inflation and does not reflected the true growth of national income.