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Mrunal [Economy Q] Contradiction in GDP (Expenditure) formula? Print

[Economy Q] Contradiction in GDP (Expenditure) formula?

Followup question on my previous article Three methods for calculating GDP in the start of definition of gdp..u r nt counting income of anil kapoor or garry kirsten..but in the topic.expenditure method of calculating gdp.u have used exports-imports..is this nt contradictory..kindly plz.xplain? Answer: Anil kapoor-Garry Kirsten example was for GNP. [GNP= domestic product+income from abroad] For GDP (expenditure), weve to calculate consumption (C), Governments expenditure (G), investment(I) and eXport (X). But what if government imports 5000 special mobile devices to print biometric UID smartcards? That is also counted in Governments expenditure accounts (G). So, weve to deduct all the iMports (M) to prevent them from being counted into nations GDP. Thats why GDP (Expenditure)= C+I+G+(X-M) Now, GNP (national product)= Domestic product + Income from abroad. But since foreigners will be sending remittances to their families back home. So if every nation adds(+) foreigners income (who is residing in their country) into their GNP, then itll lead to double counting. So weve to deduct(-) the remittances. Hence GNP= GDP + Income from abroad income earned by foreigners.

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