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  1. Home
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International Relations·Easy

Which of the following statements is/are correct? 1. Gross National Product (GNP) measures the output of a country's residents, regardless of the location of the actual underlying economic activity. 2. A large difference between a country's GNP and Gross Domestic Product (GDP) can suggest a great deal of integration into the global economy. Select the correct answer using the code given below:

Which of the following statements is/are correct?

1. Gross National Product (GNP) measures the output of a country's residents, regardless of the location of the actual underlying economic activity.

2. A large difference between a country's GNP and Gross Domestic Product (GDP) can suggest a great deal of integration into the global economy.

Select the correct answer using the code given below:

Options

  1. a.

    1 only

  2. b.

    2 only

  3. c.

    Both 1 and 2

    Correct answer
  4. d.

    Neither 1 nor 2

Explanation

  • Gross National Product (GNP) is an estimate of total value of all the final products and services turned out in a given period by the means of production owned by a country's residents.
  • GNP is commonly calculated by taking the sum of personal consumption expenditures, private domestic investments, government expenditures, net exports and any income earned by the residents from overseas investments, minus income earned within the domestic economy by foreign residents. Net exports represent the difference between what a country exports minus any imports of goods and services.
  • GNP measures the output of a country's residents, regardless of the location of the actual underlying economic activity.
  • Income from overseas investments by a country's resident’s counts in GNP and foreign investment within a country's borders does not. This is in contrast to GDP, which measures economic output and income based on the location, rather than nationality.
  • GNP and GDP can have different values, and a large difference between a country's GNP and GDP can suggest a great deal of integration into the global economy.

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