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What does Gross National Product (GNP) include that GDP does not?
- a)Government expenditure
- b)Net income earned from abroad
- c)Depreciation
- d)Direct taxes
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
What does Gross National Product (GNP) include that GDP does not?a)Gov...
Gross National Product (GNP) includes net income earned from abroad, which is not considered in GDP.
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What does Gross National Product (GNP) include that GDP does not?a)Gov...
Net income earned from abroad
Gross National Product (GNP) includes net income earned from abroad, which is not included in Gross Domestic Product (GDP). This component refers to the income earned by residents of a country from their investments or work abroad minus the income earned by foreigners within the country.
Differences between GNP and GDP
- GNP: GNP measures the total economic output produced by a country's residents, whether they are located within the country or abroad. It includes the income earned by residents from foreign investments and work.
- GDP: GDP measures the total economic output produced within a country's borders, regardless of the nationality of the individuals or companies producing the goods and services.
Significance of Net income earned from abroad in GNP
Including net income earned from abroad in GNP provides a more comprehensive picture of a country's economic performance, as it considers the income generated by its residents globally. This component helps to assess the impact of international investments and trade on the country's overall economic well-being.
Example
For instance, if a country's residents earn significant income from investments in foreign companies or properties, this would contribute positively to the GNP. On the other hand, if foreign residents earn substantial income from investments within the country, it would have a negative impact on the GNP.
In conclusion, the inclusion of net income earned from abroad in GNP distinguishes it from GDP and provides a broader perspective on a country's economic activities globally.
Gross National Product (GNP) includes net income earned from abroad, which is not included in Gross Domestic Product (GDP). This component refers to the income earned by residents of a country from their investments or work abroad minus the income earned by foreigners within the country.
Differences between GNP and GDP
- GNP: GNP measures the total economic output produced by a country's residents, whether they are located within the country or abroad. It includes the income earned by residents from foreign investments and work.
- GDP: GDP measures the total economic output produced within a country's borders, regardless of the nationality of the individuals or companies producing the goods and services.
Significance of Net income earned from abroad in GNP
Including net income earned from abroad in GNP provides a more comprehensive picture of a country's economic performance, as it considers the income generated by its residents globally. This component helps to assess the impact of international investments and trade on the country's overall economic well-being.
Example
For instance, if a country's residents earn significant income from investments in foreign companies or properties, this would contribute positively to the GNP. On the other hand, if foreign residents earn substantial income from investments within the country, it would have a negative impact on the GNP.
In conclusion, the inclusion of net income earned from abroad in GNP distinguishes it from GDP and provides a broader perspective on a country's economic activities globally.
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What does Gross National Product (GNP) include that GDP does not?a)Government expenditureb)Net income earned from abroadc)Depreciationd)Direct taxesCorrect answer is option 'B'. Can you explain this answer?
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