What is nominal HNP?

The gross national product (HNP) is the measure of the economic activity of the nation around the world, unlike the gross domestic product (GDP), which measures only economic activities within the borders of a particular country. Both measures can be expressed in nominal or real terms. Nominal GNP statistics are expressed individually at the monetary value of the year, for which economic activities are measured by nominal statistics of HNP. Real GNP measurements use a common monetary year to express the value of the global economic activity of the nation. He does this by deducting income that foreign nationals living in the country earn from GDP of the country and add the income gained by the citizens of the country living abroad. In addition, HNP includes money that citizens of this country earn from overseas investment.

Nominal GNP is the simplest statistics to compile because the monetary value will be for the year for which the analyst will calculate GNP. The problem with the nominal statistics of GNP is that the analysts arethey cannot compare accurately. This is due to inflation: for example, the currency in 1987 is unlikely to have the same value as the same currency at present. For this reason, the comparison of the nominal HNP of the Earth in 1987 with the newspaper of the same country in 2010 would not show the real quantitative difference in global economic activities by this country and its citizens, because inflation probably changed the value of the currency.

Analysts compare nominal GNP statistics from different years to each other by transforming all statistics into a basic year's monetary value based on the known level of inflation in this country. The transfer of these statistics money value from one year can remove the effects of inflation from statistics. Real GNP can be expressed using the money value of any year, which the analyst selects as a basic year.