Question

IKEA (a Swedish home furnishings company) produces desks that are made in Poland. The value of these imported desks sold at an IKEA store in the United States counts toward:

A. U.S. GDP.
B. both GDP and GNP.
C. U.S. GNP.
D. neither GDP nor GNP

Answer 1

The imported desks from Poland sold by IKEA in the U.S. contribute to the U.S. GDP since GDP includes all economic activities within a country's borders, irrespective of the origin of the product's producers.

Step-by-step explanation:

The value of desks produced in Poland and sold at an IKEA store in the United States counts toward the U.S. GDP. Gross domestic product (GDP) measures the value of goods and services produced within a country's borders. Desks made in Poland but sold in the U.S. contribute to U.S. GDP because GDP includes all goods and services produced domestically, regardless of the nationality of the producers. Gross national product (GNP) measures the value of goods and services produced by the residents of a country both domestically and abroad. Since the desks are not produced by U.S. residents or firms, they do not count towards the U.S. GNP. Therefore, the correct answer is A. U.S. GDP.