Measures of national income and output

Measures of national income and output are ways of understanding how much money a whole country makes and spends. Imagine if you wanted to know how much candy all the kids in your class had. You could count each person's candy and add up the numbers to get the total amount of candy.

Now, imagine that instead of candy, we are talking about everything people make and spend in a whole country. This includes things like food, clothes, houses, cars, and even services like going to the doctor or getting your hair cut. There are a few different ways to measure all of this, but some common ones are Gross Domestic Product (GDP) and Gross National Product (GNP).

GDP is the total value of everything made within a country's borders in a year, including goods and services. GNP, on the other hand, includes things made by a country's citizens even if they are overseas. So, if an American company makes a product in China, that product would be included in China's GDP but in America's GNP.

These measures are important because they help us understand how well an economy is doing. If the GDP or GNP is going up, it usually means more goods and services are being produced, and people have more money to spend. However, these measures don't necessarily tell us how well individual people are doing. We may need to look at other measures, like median income, to understand how the money is being distributed among the population.