Which of the following correctly defines Gross National Product at Market Prices (GNPMP)?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → GNPMP is the value of all the final goods and services that are produced by the normal residents of India and is measured at the market prices, in a year.
Gross National Product (GNP) counts what a nation’s normal residents produce, whether they are within the national boundary or abroad. Normal residents are the people who normally live in that country. Gross Domestic Product (GDP) counts what is produced within the domestic territory, by anyone. The two differ by net factor income from abroad.
Option (1) GNPMP is the value of all the final goods and services that are produced within the economic territory of India and is measured at the market prices, in a year. — Incorrect. Production within the country’s territory, by residents and non-residents alike, is GDP at market prices.
Option (2) GNPMP is the value of all the final goods and services that are produced by the normal residents of India and is measured at the market prices, in a year. — Correct. It has all the parts: final goods and services, normal residents, market prices and one year.
Option (3) GNPMP is the value of the income earned by the factors in the form of wages, profits, rent, interest, etc., within the domestic territory of a country. — Incorrect. Factor incomes earned within the domestic territory add up to net domestic product at factor cost. This leaves out depreciation and net indirect taxes.
Option (4) GNPMP is the market value of all final goods and services produced within a domestic territory of a country measured in a month. — Incorrect. This is the wording of GDP, and it says ‘in a month’. National income aggregates are measured in a year.
NCERT (2026-27): Introductory Macroeconomics — Chapter 2: National Income Accounting, Table 2.4: Basic National Income Aggregates (rows 1, 4 and 5)
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