Final answer:
The statement is false; GNI provides a broad measure that includes all economic activities, not just cash transactions, reflecting the total income of a nation's residents, including foreign investments minus foreign payments.
Step-by-step explanation:
The statement that Gross national income (GNI) does not give a complete picture of economic activity in a country because it includes only cash transactions, and many transactions in less developed countries do not involve cash, is false. GNI includes the total value of all goods and services produced by the residents of a country, which includes income from foreign investments, but excludes payments made to foreign workers or businesses. It is a broad measure that accounts for all economic activities, including non-cash transactions. GNI is often used by the World Bank and other organizations to assess and classify nations' economic status, though it has limitations and may not reflect the true standard of living when converted to dollars using exchange rates due to potential distortions from currency fluctuations.
GNI is closely related to Gross Domestic Product (GDP) and Gross National Product (GNP), but GNI focuses on income regardless of whether the income-producing activities occur within or outside the country's borders. For example, in the case of small nations with many citizens working abroad, GNI would include the remittances sent back home, providing a more comprehensive indicator of national wealth compared to GDP, which only includes domestic production.