Question

Which of the following is not counted in the GNP of the United States?

A) The profit earned by a restaurant located in the United States but owned by a Mexican
company.
B) The wage of a U.S. citizen who works in a foreign country for a foreign firm.
C) The value of services that are produced by state and local governments in the United States.
D) The interest earned by a U.S. bank on loans to a business firm located in Brazil.

Answer 1

The interest earned by a U.S. bank on loans to a business firm located in Brazil is not counted in the GNP of the United States.

Step-by-step explanation:

GNP includes what domestic businesses and labor abroad produce, and subtracts any payments that foreign labor and businesses located in the United States send home to other countries. The options given are:

1. The profit earned by a restaurant located in the United States but owned by a Mexican company. This profit would be counted in the GNP as it adds to domestic production.
2. The wage of a U.S. citizen who works in a foreign country for a foreign firm. This wage would be counted in the GNP as it is earned by a citizen and contributes to domestic production.
3. The value of services produced by state and local governments in the United States. This would be counted in the GNP as it adds to domestic production.
4. The interest earned by a U.S. bank on loans to a business firm located in Brazil. This would not be counted in the GNP as it is a payment from a foreign entity received by a U.S. bank, and does not contribute to domestic production.

Therefore, the correct answer is D) The interest earned by a U.S. bank on loans to a business firm located in Brazil.