Gross National Product (GNP)

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How does GNP affect a business?

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For the most part, it is more accurate to say that businesses affect Gross National Product (GNP) rather than the other way around.  GNP is a measure of the value of all goods and services produced by a country’s citizens, regardless of where they live in the world.  Of course, most of these goods and services are provided by businesses.  In this way, businesses as a group create the goods and services that GNP measures.

It is possible that GNP will affect businesses as well.  Even here, though, it is more accurate to say that the economic conditions that GNP measures affect businesses.  For example, when GNP is rising, an economy is in the expansion phase of the business cycle.  Businesses are more likely to expand at such times because demand from consumers is higher.  If GNP is dropping and the country is in a recession, firms are less likely to invest and expand.  In this way, you can say that GNP is affecting what a business does, but it is more accurate to say that economic conditions (which GNP measures) are impacting the business.

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