Nominal GNP, real GNP: what is the difference?

The main macroeconomic indicators include GDP and GNP (nominal and real), net national income, national wealth, personal disposable income. All of them show the level of the economic state of the country, society, citizens.

How is the ratio "nominal GNP - real GNP" measured and what is this concept? What is a deflator? This is discussed in more detail below.

The concept of

Before we talk about nominal, real GDP, let's move on to the very concept of gross national product. This is one of the main macroeconomic indicators. It is calculated as the aggregate of the final market value of all goods and services produced by citizens both inside and outside the country.

For example, a certain Russian company producing confectionery products has production facilities both in Russia and abroad. The aggregate of the final market value from the sale of products produced at all enterprises of this firm will be included in the overall GNP indicator. And the goods produced at the factory inside Russia will only enter into GDP (gross domestic product).

Thus, the gross national product is equal to: GDP plus a set of goods produced by citizens outside the country. The concepts of "nominal GNP", "real GNP" will be discussed below. Now we will explain what is the final cost of the goods.

The concept of the final cost of goods

Every detail, spare part from the car, glass, etc., can be sold on the market both in finished form and in a more complex product, for example, a car.

In order for macroeconomic indicators to be as objective as possible, only the final value of goods is taken into account. One of the methods for determining it on the domestic market is value-added tax.

Example

For example, a tractor plant buys engines from another enterprise. In this case, these products will not be accounted for in the volume of macroeconomic indicators. They will include only the amount from the sale of the tractor. But if a certain plant for the production of engines sells the unit to the secondary market through the store of agricultural spare parts, its price will go both in GDP and GNP.

Nominal and real indicators of GNP

Sometimes in the economy of a state there are such processes as increased inflation, devaluation, denomination, etc. As a rule, macroeconomic indicators are calculated in national currencies, although the gross national product, of course, can be measured in conventional units. With the growth of inflation, money depreciates, and therefore, in macroeconomic indicators, which must show the real state of affairs, it is necessary to make adjustments in view of this.

Let's give an example on wages that are nominal and real indicators. Let's say that three years ago a certain citizen received a salary of 30 thousand rubles at a rate of 30 rubles for one dollar. That is, in fact, his salary is 1 thousand dollars. Today his salary is also 30 thousand rubles. That is, this citizen nominally receives the same amount as before. However, today they can buy less than $ 500. Given that a huge number of goods in our country from abroad, then inevitably the prices in stores almost doubled. Consequently, the real wages of a citizen were less than three years ago, despite the fact that the figures (denomination) on banknotes have not changed.

A bunch of nominal GNP - a real GNP has the same meaning. No matter what the figures are today in macroeconomic indicators, it is important - whether the situation in the economy has changed for the better.

Nominal and real GNP: GDP deflator

The deflator calculates the growth or decline in the level of the economy by measuring macroeconomic indicators for a certain period of time. It is calculated by the formula: the sum of the value of market prices for goods and services for the current year, divided by the sum of the value of market prices for the reporting year. The result must be multiplied by one hundred percent.

All indicators below 100 will mean a drop in GNP, above 100 - growth.

Those who studied history know that the communists, having come to power in 1917, compared all the indicators of their development with the "blessed" year 1913. This year, indeed, the Russian empire entered the world leaders in all economic indicators. But only real indicators were compared: how many they collected, threshed, cast, etc. Then they rejected capitalism, and it was impossible to find out the monetary expression of macroeconomic indicators.

Today everything has changed. In the world of capitalism, we compare indicators for the expression of its value. No matter how much grain was harvested last year, it is important - how much it was sold.

When assessing macroeconomic indicators, a certain year is taken as a basis. As a rule, one of the most economically successful.

Often take on the basis of 2007. To calculate the growth or decline of the gross national product, it is necessary to sum up the cost of goods and services for 2007 and divide it into indicators for 2008 (or any other that we want to get results for). The resulting amount is multiplied by one hundred percent.

Example calculation of the deflator of GNP

For example, the sum of all goods and services sold was 1 trillion. Rubles for 2007 (figures are arbitrary). In 2008, due to the crisis, it became 0.8. Thus, the GDP deflator will be calculated by the formula: (0.8 / 1) х 100 = 80.

That is, the GNP of 2008 was 80% of the pre-crisis year of 2007.

But we get only indicators of nominal volume. To obtain real indicators, it is necessary to take into account the inflation indicators and the rate of official currencies (if macroeconomic indicators were taken into account in the national currency).

For example, in 2014, the dollar was given about 35 rubles, in 2016, about 62 (we will not specifically take into account the exact course, only the essence is important to us). The main macroeconomic indicators are calculated in rubles (at least, we are informed about this in news feeds). Indicators of GNP for 2014 are about the same as in 2015 (if grown up, then not much).

Conditionally we assume that in both 2014 and 2015 the volume of GNP was worth $ 1 trillion. Rubles, but with a significant devaluation and the growth of currency by 1 trillion. We will buy dollars at the rate of 62 rubles per cu. Less by about 45% than at the rate of 35 r. For cu

Thus, the nominal index remained at the same level - 1 billion rubles, while real figures fell by almost 45%.

Of course, all leading economists and politicians expect the indicators of the gross national product, as a rule, in dollars. In this case, the devaluation of the national currency will not play a special role in determining the real and nominal volume, only inflation, which is observed in the dollar, is, according to the most crude estimates, up to 1%.

Thus, having carried out all the necessary calculations, it is possible to compare the nominal / real indicators of GNP and determine the true state of affairs in the economy.

Inflation will always be?

But in what cases is the real GNP equal to the nominal GNP? This will happen with two indices equal to zero:

• The level of inflation.
• The level of devaluation of the national currency in relation to the world currency. That is, this event seems impossible. Never, according to economists, in the modern capitalist world nominal and real GNP will not be equal. Unless, of course, we take the nominal figures in a year, which was officially taken as the base one. For example, if the year 2007 is taken as a basis, then the real and nominal indicators in it will be equal. But then we will not be able to understand the dynamics of economic development.

Conclusion

So, we disassembled such concepts as nominal GNP, real GNP, and also determined the deflator formula, which makes it possible to determine the development of the country. We hope that the data of the concept are revealed as much as possible. After all, in the world of economic crises it is necessary to be guided in the basic economic concepts.