A gross national product (GNP), basic index of the economic state of society, is a market value of all of eventual commodities and services, made during a year.

Under the finished goods are understood goods and services which are bought for the eventual use but not for resale or further treatment or processing. Transactions, including intermediate products, from other side, behave to the purchases of commodities and services for further treatment or processing or for resale. The sales of the finished goods join in GNP, but from its the sales of intermediate products are eliminated, because all of taking a place intermediate transactions are already included in the cost of the finished goods. The separate account of intermediate products would mean a double account and overextension of GNP.

We will suppose, for example, that the process of production of woolen suit, till it will get in the hands of eventual user, includes five stages (see table 2-1). On every stage a difference is meantime, that a firm paid for a product, and that it gets from its sale, paid as an ettlings, rent payments, percent and incomes in an exchange for resources, in-use this firm in the process of production and appeal of suit.

At the calculation of national income to avoid a double account, it is necessary carefully to watch, that an only value added, created every firm, joined in him.

A value added is market price of volume of products, by the made firm, instead of cost consumed raw material and materials, purchased by it for suppliers.

Laying down a value added, created all of five firms, in a table 2-1, it is possible exactly to count up the cost of suit. Just, counting up and adding up value addeds, created all of firms in an economy, it is possible to define GNP, that market value of general issue.

Intermediate commodities, unproductive transactions and sales of the used commodities, are eliminated at the count of GNP.

State and private manuals and subsidies the recipients of which do not bring in reply to these payments some contribution to creation of current production volume, and also transactions with securities, that purchase-sale of actions and bonds, behave to the unproductive transactions. GNP can be expected by addition of the combined charges, necessary for the production of all eventual goods, or by addition of profits, got from the production of this volume of products.

Table 2-1. Value added at a five-phasic production process (hypothetical information).

On charges GNP is determined as a sum of consumer charges on goods and services (С), gross investments of companies (Ig), public purchasing of commodities and services (G) and clean export (Xn);

The detailer analysis of constituents of GNP will be presented in it and subsequent chapters.

The personal consumer charges are included by the charges of households for the purpose consumption of the protracted use (cars, refrigerators, videotape recorders etc.), on the commodities of current consumption (bread, milk, beer, cigarettes, shirts, tooth-paste and pr.), and also consumer charges on services (lawyers, doctors, mechanics, hairdressers) .

The gross investments of companies are included by three basic components: 1) all of eventual purchases of machines, equipment and machine-tools by businessmen; 2) all of building and 3) change of supplies.

Gross investments are subdivided into an investment on substituting for leaving of capital (necessary for maintenance of the capital accumulated a country at existent level) and clean investments (clean increase of volume of the accumulated capital). Positive clean investments are characteristic for a growing economy, while negative clean investments - for an economy with going down business activity.

GNP on a profit, or on distributing, settles accounts as a sum of ettlings of the hired workers, rent payments, percent, profit from a property, income-tax from corporations, dividends, retained earnings of corporations and two unconnected with profits payments (deductions on consumed capital and indirect taxes indemnity from corporations).

GNP as one very important failing has a measuring device of gross production volume: in him a tendency is stopped up to embellishing of picture of current annual production. It takes a place because It does not foresee deduction of that part of annual production, which is needed in an order to substitute for investment commodities, utilized in a production in this year.

In the American system of drafting of national accounts the index of net national product (Net NP) is determined by deduction from GNP of deductions on the consumption of capital, which serve as the measuring device of volume of deputizing investments, or volume of capital, consumed during the production of as depreciation charges. So, a net national product (Net NP) is a gross national product (GNP), adjusted to the amount of depreciation decrees.

A national income is gross income, begun to work the suppliers of resources; It settles accounts by deduction from Net NP of indirect taxes on business.

The personal income is a gross income, paid individuals and families to payment of taxes from citizens.

Passing from a national income as measuring device of the begun to work profit to the personal income as index of profit, actually got, it is necessary to subtract from a national income such three types of profits which are begun to work, but not got (payments on social security, income taxes and the retained earnings of corporations corporations), and also to add profits, got, but not subsequent upon current labour activity (transfer payments).

Transfer payments consist of such types of payments, kak:1) payments on insurance to old-age and from accidents, and also doles, based on the social programs; 2) payments on to conditioning for existence; 3) various payments to the veterans, for example subsidies on education and manuals on disability; 4) payments of private pensions and doles and  conditioning for existence; 5) percent payments, paid a government and users.

An income after-tax is the personal income instead of taxes from citizens. By an income after-tax the size of profits of families and individuals, present in their order for a consumption and economies is measured.

Individual taxes consist of the personal income-taxes, taxes on private property and inheritance taxes among which a leading role belongs to the first type of tax. The results of the resulted analysis are presented in a table 2-2.

Table 2-2. Between’s   by a gross national product, by a national income, personal income and profit after payment of taxes in 1988 (milliard. Dollars)

A cost of production of different years (gross national products) volumes can be comparable only in case that the cost of monetary item does not change.

The standard of prices is expressed as an index. A price index is the measuring device of between by the combined cost of certain set of commodities and services, urgent a «market basket», for this temporal period and by the combined cost of identical or similar group of commodities and services in a base period. Indicated orienteer, or initial level, is named «By a base year».

In obedience to the accepted practice, the relation of costs of this year and base year is multiplied by 100.

A price of GNP index, or deflator of GNP, includes the costs of consumer goods and services not only, but also cost of investment commodities, commodities, bought a government, and also commodities and services, purchased and sold in the world market. On this reason deflator of GNP is a price index, related to adjustment money, or nominal, volume of GNP taking into case a price change. Nominal GNP is reflected by a production volume, shown in prices, existing in the moment of time, when this volume was made.

A price index for a base year will always be equal 100, as in this case «this year» and «base year» coincide.

For example, to expect a price of GNP index for 1950, it is necessary to define a production volume in 1950 and then count up, how many the analogical set of commodities and services would cost in the prices (costs) of base year.

We will accept 1982 year for base. For example, if prices on products 1950 in 1950-1982 grew in 4 times, the price proportion of market baskets will be equal 1/4 (0,25) and a price 1950 index will be equal 25 (0,25 x 100).