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National Product

The national product is the value of all the goods and services produced by an economy over some given period. The figures published are usually for a year. Figures for one month and for three months are also published. These published figures are useful in indicating what is happening to such things as the overall level of output: whether it is growing and if so how quickly; how it compares with other economies and so on. The published statistics give details for different sectors of the economy. Again, these give useful information on trends and developments.

There are various ways of measuring the national product:
1. The value produced by each of the firms in the economy can be added together. This is known as the "output method".
2. The amount spent in buying everything produced can be totalled. This is known as the "expenditure method".
3. The incomes earned by the producers can be measured. This is known as the "incomes method".

Each of these methods should produce the same result since, of course, they are different ways of measuring the same thing.

As an illustration, if a book is sold for , that is the value produced by the firm. It is also the amount spent on buying that book. The firm receives a revenue of , which becomes the income earned by the persons involved in its production by being distributed as rent, wages, interest and profits. Using the three different ways of measuring the national product is a useful way of checking the accuracy of the figures produced.

Information: Gross national product and country.


About the Author: The author of this economics-related article is a publisher in Economics & Politics.




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