What is the difference between GDP and National Income?

As a citizen of a country, it is good to know the stand of your country in financial terms. The most common terms you will hear are GDP and national income. GDP or Gross Domestic Product is the value of services and goods generated within a country.

It is the measurement of the overall economic output a country is producing. GDP also helps in determining the local income of a country thus contributes in determining the future growth and standard of living of a country. National income, on the other hand, is the total value of all goods and services being produced and generated within a country typically calculated every year. It serves as an indication of how healthy or not a country is in terms of its economic growth.

You pick off a toy or other object and look at the tag that was attached to this object when the company manufactured it. There may be some writing on it, but there will most likely also be wording that denotes what country made this object. This shows that this object was made in this country and then sent to the country for the person that wanted to buy it. When companies export their products, this helps that country’s economy.

There is a calculated amount of money to determine how much value of the goods and services produced for one country. That is called GDP or gross domestic product. The gross national income includes the gross domestic product as well as the amount earned by foreigners.