Question

what are the disadvantages of gross national product?

Give an example

Answer 1

The GDP can be defined the market value of all goods and services which are produced in the domestic territory of the country in the current financial years.

GNP= GDP + net factor income from abroad.

Disadvantage of gross national product.

1. Difficulty in measuring for quality changes in GNP .

2. Commodity Taxes Inflate the Value of GNP without any rise in the quantity of the Physical Output

3. Problems of Unreported and Illegal Activities.

The example of disadvantage of GNP is ;

The production of many goods and services is not reported to government by many producers for avoiding taxation. Therefore GNP gets underestimated and so it shows much less welfare than that actually enjoyed by people.