PAKISTAN STUDIES NOTES-GRADE 11th & 12th

Chapter # 5 – Economic Planning and Development in the Islamic Republic of Pakistan

5.1   Meaning and Importance of Economic Planning and Development

5.1.1. Define the Terms ‘Economy’, ‘Inflation’ , ‘Gross Domestic Product (GDP)’, ‘Gross National Product (GNP)’.

Economy

An economy is the system of production, distribution, and consumption of goods and services within a region or country. It includes all economic activities like manufacturing, trade, agriculture, and services, and is influenced by factors such as government policies, resources, and technology.

 Inflation

Inflation is the rate at which the general level of prices for goods and services rises, leading to a decrease in the purchasing power of a currency. It reflects the overall increase in prices and cost of living over time, often measured by indices such as the Consumer Price Index (CPI) or Producer Price Index (PPI).

Gross Domestic Product (GDP)

Gross Domestic Product (GDP) is the total monetary value of all finished goods and services produced within a country’s borders in a specific time period, usually annually or quarterly. It serves as a comprehensive measure of a nation’s overall economic activity and health.

Gross National Product (GNP)

Gross National Product (GNP) is a measure of the total value of all goods and services produced by the residents of a country, both domestically and abroad, over a specific period. It includes the GDP plus any income earned by residents from foreign investments minus any income earned by foreigners within the country. GNP provides a broader measure of a country’s economic output than GDP, as it takes into account the contributions of its citizens worldwide.