actual gross national product

actual gross national product (GNP)

the level of real output currently being produced by an economy. Actual GNP may or may not be equal to a country's POTENTIAL GROSS NATIONAL PRODUCT. he level of actual GNP is determined by the interaction of AGGREGATE DEMAND and potential GNP. If aggregate demand falls short of potential GNP at any point in time, then actual GNP will be equal to aggregate demand, leaving a DEFLATIONARY GAP (output gap) between actual and potential GNP. However, at high levels of aggregate demand (in excess of potential GNP), potential GNP sets a ceiling on actual output, and any excess of aggregate demand over potential GNP shows up as an INFLATIONARY GAP.

Over time, the rate of growth of actual GNP will depend upon the rate of growth of aggregate demand, on the one hand, and the growth of potential GNP, on the other.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005