In addition to calculating GDP, Stats Canada uses the national income accounts to calculate other...
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Transcript of In addition to calculating GDP, Stats Canada uses the national income accounts to calculate other...
In addition to calculating GDP, Stats Canada uses the national income accounts to calculate other things too:
Gross National Product Total income acquired by Canadians both within Canada
and elsewhere
Notice the Difference: GDP focuses on incomes made in Canada GNP focuses on the earnings of Canadians
8.3 Other Economic Measures
To calculate GNP:
GNP = GDP + NR (Net income inflow from assets abroad; e.g. stock dividend earned from financial investments by Canadians in the rest of the world) – NP (net payment outflow to foreign assets).
GNP = GDP + NR - NP
Gross National Product
PPP Adjustment – Used for comparing GDP: we build a basket of comparable goods and services and look at the prices of that
basket in different countries. Purchasing Power Parity is the exchange rate needed for say $100 to buy the same quantity of
products in each country.
Another type of income derived from national accounts is Disposable Income – household income, after payment of income taxes, which can be either consumed or saved.
Disposable Income
GNP is less than GDP, due to the importance of foreign financial investments in Canada (which remember, get subtracted from
GDP to get GNP)
Disposable income is less than both GDP and GNP