Abstract
This chapter focuses on the concept of the gross national product (GNP), which is a widely used measure of economic performance. The GNP is a measure of the market value of goods and services produced during a specific time period. It is a flow concept and is measured in terms of an annual rate. It is a device designed to measure the market value of production that flows through the economy's factories and shops each year. GNP seeks to measure current production; thus, it cannot be arrived at by summing the totals on all of the nation's cash registers. The inclusion of depreciation in GNP points out that it is a gross rather than net measure of economic production. Because GNP fails to make an allowance for capital goods that wear out during the year, it overstates the net output of an economy.
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