Exclusion in GNP Calculation

GNP (Gross National Product) is the total value of goods and services produced by a country's residents, including its citizens and businesses, within a certain period. However, certain types of income should be excluded from GNP calculation to avoid double-counting and provide a more accurate measure of a country's economic performance.

Excluded Income in GNP Calculation

The following types of income should be excluded from GNP calculation:

1. Government transfer payment: Government transfer payments, such as welfare benefits, do not represent productive economic activity and should be excluded from GNP calculation.

Included Income in GNP Calculation

The following types of income should be included in GNP calculation:

1. Rental incomes: Rental incomes are the payments received by property owners for the use of their properties. It represents productive economic activity and should be included in GNP calculation.

2. Interest payments: Interest payments are the payments made to lenders for the use of their money. It represents productive economic activity and should be included in GNP calculation.

3. Dividends: Dividends are the payments made to shareholders of a company from their profits. It represents productive economic activity and should be included in GNP calculation.

Conclusion

In conclusion, GNP calculation should exclude government transfer payments, which do not represent productive economic activity. However, rental incomes, interest payments, and dividends should be included as they represent productive economic activity.