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Econ: What are Net Domestic Product and Net National Product? 3 Views
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Description:
What are Net Domestic Product and Net National Product? Net domestic product is the amount of output from a country minus the depreciation figure. The net national product is the value of the goods and services created by a country minus the depreciation figure. The difference between the two figures is that net domestic product includes anything produced in a country, whether it be by citizens of that country or not; net national product includes anything produced by citizens of a country, no matter where it’s produced.
Transcript
- 00:00
And finance Allah shmoop What Our net domestic product and
- 00:05
net national products their ways to measure the performance of
- 00:11
an economy They represent the value of goods and services
- 00:14
created by an economy during a set time period Excluding
- 00:17
the production used to replace older stuff that's you know
Full Transcript
- 00:21
ready to get thrown out So you've heard of GDP
- 00:23
Gross domestic product right Well net domestic product is GDP
- 00:27
is lesser known sibling You know I think about a
- 00:29
family with two kids They both want to make it
- 00:31
big in Hollywood Think the Baldwins or the Hemsworth or
- 00:34
the Wall Berg's One kid becomes a huge movie star
- 00:37
gets tons of attention Lots of press shows up on
- 00:39
all the red carpets and in the gossip columns you
- 00:42
ever kid becomes an Indy star stays mostly in the
- 00:44
shadows but gets some attention from critics and snooty film
- 00:48
fans who like black and white flicks with subtitles and
- 00:51
foreign language sounding things and a lot of cigarettes Well
- 00:54
GDP is the big budget star level Hollywood icons that
- 00:57
NDP is the cult favorite indie stat Well GDP tracks
- 01:01
the value of all the final goods and services produced
- 01:04
in a country during a period of time everything gets
- 01:07
counted That's GDP However some of that production represents Ivan's
- 01:11
meant to replace broken down or obsolete products Right let's
- 01:14
say you run a candy bar manufacturer and your Newgate
- 01:17
spinner breaks down You buy a new one That replacement
- 01:20
spinner gets counted in GDP but not in NDP You
- 01:24
use the machine to make your signature product smooth Newgate
- 01:27
Sandwich wraps Or since that production gets counted in both
- 01:31
GDP and NDP it's newly made stuff not products for
- 01:34
replacement Well in accounting terms this cost for replacement products
- 01:37
gets tracked as depreciation GDP includes those figures NDP leaves
- 01:42
them out Okay there's another distinction here to mention another
- 01:46
sibling Toiling Away is a Broadway understudy in a musical
- 01:49
version of The Hulk That third sibling is Net National
- 01:52
product An NPR news net domestic product counts all the
- 01:56
final products and services produced inside a particular country leaving
- 01:59
out the A replacement production Of course net national product
- 02:02
counts the final products and services made by citizens of
- 02:05
a country no matter where that production takes place in
- 02:09
DP looks at where it happens and NP looks at
- 02:12
who makes it happen So the unknown Hemsworth brother gives
- 02:16
a performance as the musical hulk at a theatre in
- 02:19
Sydney Australia The Hemsworth are Australian and he's you know
- 02:22
a performing in Australia that gets counted as both NDP
- 02:26
and NNP Now Little Hemsworth moves the production Toa London
- 02:31
It gets counted as an MP but not in DP
- 02:34
It's produced by an Australian but not in Australia So
- 02:39
now you see what economists think of a little Hemsworth
- 02:41
theater career Whether or not performing as a singing hulk
- 02:44
on London's West End will impress his brothers or not 00:02:46.61 --> [endTime] Well that's a different story
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