Question

How is GDP different from Gross National Product, or GNP?

a) Domestic product adjusted for inflation.
b) The economic product of a nation.
c) It doesn't differ; they mean the same thing.
d) Gross National Product is Gross Domestic Product plus net foreign factor income.

Answer 1

GDP refers to the value of goods and services produced within a country, while GNP includes the value of goods and services produced by a country's citizens and firms, both within and outside the country.

Step-by-step explanation:

Gross Domestic Product (GDP) and Gross National Product (GNP) are two measures used to assess the economic performance of a country. GDP refers to the total value of all final goods and services produced within a country's borders, regardless of who owns the productive assets. It does not include income generated by domestic businesses and labor abroad or payments made by foreign businesses and labor located within the country. On the other hand, GNP includes the value of all goods and services produced by a country's citizens and firms, both within and outside the country's borders, and deducts payments sent by foreign businesses and labor to their home countries.

For example, if a Japanese company has a factory in the United States, the value of the goods produced by that factory would be included in the GNP of Japan. In contrast, it would not be included in the GDP of the United States. The difference between GDP and GNP is that GNP takes into account the income generated by a country's citizens and firms around the world, while GDP focuses mainly on what happens within a country's geographical boundaries.